Biden’s Executive Order Could Impact Foreign-Owned Apps

On June 9, 2021, President Biden signed an Government Order (“EO”) revoking Trump’s orders on TikTok and WeChat. Of their stead, President Biden’s EO topics software program functions managed or owned by “international adversaries” (i.e., China, Cuba, Iran, North Korea, Russia, and Nicolas Maduro) to a assessment course of led by the Commerce Division to guage whether or not an app presents U.S. nationwide safety issues. This EO matches throughout the broader confrontation between the US and China relating to rising applied sciences, delicate private information, and the threats we see from cyberattacks that exploit vulnerabilities in U.S. IT techniques.

In line with the Biden Administration, the orders issued by Trump (which we mentioned right here and right here) have been revoked as a result of they didn’t present “intelligible standards” to guage nationwide safety dangers posed by software program functions and subsequently have been unenforceable. As context, the TikTok and WeChat orders have been intensely litigated, although nationwide injunctions of the orders into late summer season of 2020. These instances froze the battle between the Chinese language social media firms and the U.S. authorities – which is why these apps are nonetheless extensively out there and at present in use in the US.

In contrast to the TikTok and WeChat orders, the latest EO shouldn’t be directed at anybody firm. Subsequently, any app that’s owned by a “international adversary” and poses a risk to nationwide safety might probably be topic to restrictions after the Commerce Division assessment. The assessment course of might be much like the one outlined in Government Order  (“EO 13873”) associated to info and communication expertise or companies (“ICTS”) involving “international adversaries,” the place the Commerce Division might prohibit the lined transaction, approve, or approve with situations (see our discussions about that EO right here and right here). Finally, the tip outcome could be the identical: the usage of TikTok and WeChat could also be restricted in the US as a result of the U.S. Authorities determines that TikTok and WeChat pose too nice of a nationwide safety risk. However, this EO seeks to have a principled assessment course of that may apply to different apps as properly (i.e., the subsequent TikTok or WeChat).

What Software program Functions might be Lined by the EO? 

It’s all in regards to the information. The underlying concern that Trump’s TikTok and WeChat orders have been meant to deal with was the risk posed by Chinese language actors accessing delicate private information of U.S. residents. Biden’s EO targets that very same concern however covers any app used on cellular units, tablets, and computer systems that “acquire, course of, or transmit information through the web.” A big swath of apps at present available on the market might fall beneath the purview of the EO. Nevertheless, a limiting issue is that the apps should even be designed, developed, manufactured, or equipped by individuals which are owned or managed by, or topic to the jurisdiction of a “international adversary” – i.e., China, Cuba, Iran, North Korea, Russia, and the Maduro Regime. So, apps like WeChat and TikTok are lined merchandise beneath the EO.

Standards for Figuring out Apps that Might Pose Nationwide Safety Dangers 

The EO outlines the next potential indicators of nationwide safety threat referring to apps made by international adversaries:


possession, management, or administration by individuals that help a international adversary’s army, intelligence, or proliferation actions;


use of the related software program utility to conduct surveillance that allows espionage, together with via a international adversary’s entry to delicate or confidential authorities or enterprise info, or delicate private information;


possession, management, or administration of related software program functions by individuals topic to coercion or cooption by a international adversary;


possession, management, or administration of related software program functions by individuals concerned in malicious cyber actions;


a scarcity of thorough and dependable third-party auditing of related software program functions;


the scope and sensitivity of the information collected


the quantity and sensitivity of the customers of the related software program utility;


the extent to which recognized dangers have been or could be addressed by independently verifiable measures.”


Transactions that contain a “heightened threat” would come with these apps owned, managed or managed by individuals supporting international adversary army or intelligence service or when the apps acquire delicate private information.

So… What Now?

It appears clear that the EO is primarily focused at apps owned by Chinese language firms. Russian apps can also be a priority – we now have seen important cases of Russian felony teams and Russian intelligence businesses use U.S. technological vulnerabilities for malign exercise – however Russian software program shouldn’t be doubtless in large, pervasive use in the US. Three of the opposite international locations listed as international adversaries (Cuba, Iran and North Korea) are already topic to complete sanctions and subsequently already largely restricted. Thus, though the Biden EO is definitely broader and extra consistent with broader nationwide safety coverage as to international locations the US deems “international adversaries,” the impression of the EO might be dominantly on software program functions of Chinese language origin. The Commerce Division has been ordered to start their assessment instantly –however meaning there isn’t a rapid impression of this EO till the Commerce Division conducts its assessment and designates apps beneath the EO..

For now, U.S. firms which are evaluating their use of software program functions developed by China or the opposite international locations ought to pay attention to what could be coming down the pike. For a broader dialogue about reevaluating what you are promoting relationships involving China, see our publish right here. As all the time, we are going to preserve you up to date on the rapidly altering regulatory panorama impacting your worldwide enterprise relationships.

*Patrick Diaz is a summer season affiliate within the Sheppard Mullin Washington D.C. Workplace.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.
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