President Joe Biden’s executive order aimed at safeguarding Americans’ sensitive data would force some Chinese apps to take tougher measures to protect private information if they want to remain in the U.S. market, according to people familiar with the matter.
The goal is to keep foreign adversaries like China and Russia from gaining access to large amounts of personal and proprietary business information.
The U.S. Department of Commerce may issue subpoenas to collect information about certain smartphone, tablet and desktop computer software applications. Then the agency may negotiate conditions for their use in the United States or ban the apps, according to people familiar with the matter.
Biden’s June 9 order replaced former President Donald Trump’s 2020 bans against the popular Chinese applications WeChat, owned by Tencent Holdings Co (0700.HK), and ByteDance Ltd’s TikTok. U.S. courts halted those bans.
U.S. officials share many of the concerns Trump cited in his order banning TikTok, according to one person familiar with the matter. Notably, they fear that China could track the locations of U.S. government employees, build dossiers of personal information for blackmail and conduct corporate espionage.
While the new order does not name companies, it could end up capturing more apps than the Trump bans and hold up better if challenged in court. Reuters is the first to report details on how the Biden administration plans to implement the order, including seeking support from other countries. U.S. officials have begun speaking with allies about adopting a similar approach, one source said. The hope is that partner countries will agree on apps that should be banned.
U.S. Commerce Secretary Gina Raimondo will decide which apps to target for U.S. action, but they must meet certain criteria. For instance, they must be owned, controlled or managed by a person or entity that supports the military or intelligence activities of a foreign adversary such as China or Russia. If Raimondo decides an app poses an unacceptable risk, she “has the discretion to notify the parties” directly or publish the information in the government’s official daily publication, the Federal Register, a Commerce Department spokesman said.
Companies will then have 30 days to object or propose measures to secure data better, the Commerce spokesman said.
The process stems from a May 2019 Trump executive order for reviewing information and communications technology from foreign adversaries.
Apps from China are most likely to find themselves in the Commerce Department’s crosshairs given escalating tensions between Washington and Beijing, the Chinese government’s ability to exert control over companies and the number of Chinese apps used by Americans.
WeChat, TikTok and eight other apps targeted by the Trump administration in its last months are eligible for review by Biden’s team, one source said.
The Trump targets also included Ant Group’s (688688.SS) Alipay mobile payment app, WeChat Pay, Tencent Holdings Ltd’s QQ Wallet, Tencent QQ, CamScanner, SHAREit, VMate published by Alibaba Group (9988.HK) subsidiary UCWeb and Beijing Kingsoft Office Software’s (688111.SS) WPS Office.
Some of the apps named by Trump have serious data protection issues, while it’s unclear why others pose a heightened risk to national security, according to another person familiar with the matter.
The order will apply to business apps, including those used in banking and telecommunications, as well as consumer apps, the first source said.
Apps linked to other adversaries such as Iran or Venezuela are already blocked under broader sanctions.