On September 18, 2020, the U.S. Department of Commerce issued two orders identifying the specific transactions related to the WeChat and TikTok mobile applications ("Orders") that are prohibited pursuant to Executive Orders 13942 and 13943 that were issued on August 6 and discussed in our prior client alert. The Orders impose restrictions relating to transactions with: (1) Tencent Holdings Ltd. (Tencent) and its subsidiaries as they relate to the WeChat app; and (2) ByteDance Ltd. (ByteDance) and its subsidiaries, including TikTok Inc.
The WeChat order states that all prohibitions take effect on September 20, 2020. With respect to TikTok, the order appears to indicate that the listed actions are prohibited beginning September 20, but the Department of Commerce has indicated that it will "implement" certain of the prohibitions on a staggered schedule, as described below (what it would mean to have a transaction "prohibited" but not "implemented" is not explained in the Orders).
The Orders prohibit specific transactions by any person or involving any property that is subject to the jurisdiction of the United States with ByteDance or its subsidiaries, including TikTok, and with Tencent or its subsidiaries when related to WeChat, but only when those transactions are carried out "within the land or maritime borders of the United States and its territories." Further, the Orders indicate that the prohibitions apply only to business-to-business transactions and not to the use of these mobile applications by individuals.
The prohibited transactions include:
As stated above, the Orders state that the prohibitions apply to business-to-business transactions and not to the use of these mobile applications by individuals. The Orders also exempt the following activities from the prohibitions:
The Orders use broad terminology and not all terms are defined. As such, we believe further guidance from the Commerce Department regarding the precise scope of the restrictions set forth in the Orders is necessary, and the Commerce Department's implementation should be observed closely. In the meantime, however, some preliminary takeaways are: