On June 9, 2021, President Biden issued Executive Order (“EO”) 14034, revoking three Trump Administration Executive Orders which had banned transactions involving Chinese-owned apps on national security grounds (the “Revoked Executive Orders”). Despite revoking the bans, EO 14034 acknowledged concerns about software applications controlled by a “foreign adversary” and directed federal agencies to investigate and make recommendations regarding data security issues.

Two of the Revoked Executive Orders, issued in August 2020, banned any US transactions involving the popular TikTok app (owned by Chinese company ByteDance Ltd.) and WeChat app (owned by the Chinese company Tencent Holdings Ltd.). The third Revoked Executive Order, issued in January 2021, banned several additional Chinese apps (including SHAREit, Tencent QQ, and WeChat Pay, among others). The Trump Administration justified the bans on national security grounds. All of the Revoked Executive Orders cited concerns about the Chinese government using the apps to collect sensitive personal data from US users, as well as concerns about Chinese censorship and disinformation campaigns on the apps.

The now-revoked Trump Administration TikTok and WeChat bans had not actually gone into effect. In several parallel lawsuits challenging the Revoked Executive Orders, the US federal courts issued temporary injunctions prohibiting the government from enforcing the bans. In February 2021, the Biden Administration asked the courts handling these cases to temporarily stay any further legal proceedings pending a review of the Revoked Executive Orders.

EO 14034 reduces some of the pressure on Chinese-owned software companies operating in the US. However, the provisions of EO 14034 show that the Biden Administration shares some of the Trump Administration’s cybersecurity concerns. EO 14034 directs federal agencies to assess the risks posed by a “foreign adversary” having control over software applications and access to US users’ personal data. Therefore, EO 14034 may lead to further regulatory action, perhaps framed in more general terms and not targeting a specific company. EO 14034 does not affect the actions of the Committee on Foreign Investment in the United States (“CFIUS”).

We will continue to monitor developments in this area, and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or our usual Herbert Smith Freehills contacts for more information.

Jonathan Cross
Jonathan Cross
Counsel, New York
+1 917 542 7824
Christopher Boyd
Christopher Boyd
Associate, New York
+1 917 542 7821
Brittany Crosby-Banyai
Brittany Crosby-Banyai
Associate, New York
+1 917 542 7837
Alex Hokenson
Alex Hokenson
Associate, New York
+1 917 542 7836
Christopher Milazzo
Christopher Milazzo
Associate, New York
+1 917 542 7807