US Commerce Department Released Scope of Bans on Tiktok and WeChat

Posted by: Mark Heusel - Dickinson Wright on Thursday, September 24, 2020

DW China Trade Update (35th Edition) 

迪克森律所中国团队简报 (第三十五期)

The US Commerce Department released scope of bans on Tiktok and WeChat 


This past August, the Dickinson Wright China Team reported on the U.S.'s Executive Order 13942.

The order placed restrictions on any transactions with two of the most popular Chinese social media apps used in the world, TikTok and WeChat. The term "transaction" was undefined in the Executive Order at that time, but the U.S. President requested the Department of Commerce ("DOC") to establish rules to enforce the President’s intent within 45 days. Since then, TikTok’s parent company, ByteDance Ltd. was forced into negotiations with various U.S. companies to placate the Administration’s Executive Order. Within the last few days, ByteDance announced that it had reached an agreement in principle with Oracle and Wal-mart.

On Saturday, the U.S. apparently agreed in “concept” to Oracle and Wal-mart taking a 20% stake in TikTok (the details of such a deal and whether the President will get his previous ballyhooed contribution to the Treasury Department remain unclear). Earlier in the day, the U.S. President had incorrectly stated that TikTok would be “totally controlled by Oracle and Wal-mart, but has some details emerged, it appears more like a partnership where Oracle will host data and Wal-mart will receive some commercial rights.  In addition, the U.S. President insisted that the transaction included a $5 billion contribution to support a fund to “educate people” about the “real history of our country.” ByteDance was unable to confirm the accuracy of this claim by the U.S. President.

今年八月,我们中国团队曾报道了特朗普总统的第13942号行政命令,该行政命令限制了与抖音和微信这两款世界上最受欢迎的中国社交媒体应用的任何交易。“交易”一词在当时的行政命令中没有定义,但是总统要求商务部在45天内制定规则和法规从而来执行这一行政命令。此后,抖音的母公司,字节跳动有限公司被迫与多家美国公司进行谈判以与政府的行政命令相协调。在过去的几天,字节跳动宣布已与甲骨文公司和沃尔玛公司在原则上达成协议。上周六,总统似乎对甲骨文公司和沃尔玛公司收购抖音20%的股份这一概念表示同意 (交易细节以及总统是否会像其之前大肆宣传地将向支付给财政部费用仍不清楚)。当天早些时候,总统错误地指出,抖音将“完全由甲骨文公司和沃尔玛公司控制,”但有一些细节浮出水面,交易看起来更像是甲骨文公司将托管数据并且沃尔玛将获得一些商业权利的合作伙伴关系。此外,总统坚称此次交易包含一笔50亿美元的捐款,用于支持一个“教育人们”有关“我们国家真实历史”的基金。字节跳动尚无法证实总统的这一说法的准确性。

In contrast, WeChat’s parent, Tencent Holding, Ltd remained relatively quiet in its response to the U.S. Executive Order. While it did create a new application known as WeCom, setting it up as a potential alternative to the current WeChat application, and several users initiated litigation challenging the Executive Order, Tencent does not seem ready to sell its U.S. assets.  


Apparently wanting to continue applying pressure on these two Chinese powerhouses, the DOC announced on Friday that it was implementing specific rules to enforce the President’s Executive Order, prohibiting certain transactions related to these two mobile applications in order to safeguard the “national security” of the United States. 


Specifically, as of September 20, 2020, the following transactions are prohibited:


  • Any provision of service to distribute or maintain the WeChat or TikTok mobile applications, constituent code, or application updates through an online mobile application store in the U.S.;


  • Any provision of services through the WeChat mobile application for the purpose of transferring funds or processing payments within the U.S.


In addition, as of September 20, 2020, for WeChat and as of November 12, 2020, for TikTokthe following transactions are prohibited:


  • Any provision of internet hosting services enabling the functioning or optimization of the mobile application in the U.S.;


  • Any provision of content delivery network services enabling the functioning or optimization of the mobile application in the U.S.;


  • Any provision directly contracted or arranged internet transit or peering services enabling the function or optimization of the mobile application within the U.S.;


  • Any utilization of the mobile application’s constituent code, functions, or services in the functioning of software or services developed and/or accessible within the U.S.


The DOC’s official actions were posted in two Notices, which appear in the Federal Register, The Notices further describe the Prohibited Transactions, define key terms, and importantly describe what is not covered by the DOC’s actions.

For example, the Notices clarify that the Prohibited Transactions only apply to business-to-business transactions. Notably, the Notices also set out exceptions to the Prohibitions, one of which addresses the concerns that most WeChat users have related to personal communication through WeChat. The Notices explain, "[t]hese identified prohibitions do not apply to the exchange between or among WeChat mobile application users of personal or business information using the WeChat mobile application, to include the transferring and receiving of funds." WeChat mobile applications include WeChat Apps running on any mobile device, including a phone, tablet and watch.

Interestingly, but perhaps not surprising in light of the Administration’s forcing ByteDance’s hand to sell to Oracle, the Prohibitions also do not apply to “[t]he storing of WeChat mobile application user data in the United States.” This likely is an indication that if WeChat were to store user data in the U.S., the Prohibitions would not apply.

《联邦纪事》的两个公告公布了商务部的正式行动。这两个公告进一步描述了被禁止的交易,定义了关键术语并且着重描述了商务部行动中未涵盖的内容。例如,公告澄清了禁止的交易仅仅适用于企业对企业之间的交易。值得注意的是,公告同时列举了禁令的例外情况,其中之一解决了大多数微信用户对使用微信进行个人用户之间交流的担忧。该公告解释说: “这些已确认的禁令不适用于微信移动应用程序用户之间使用微信移动应用程序交换个人或商业信息,包括资金的转移和接收。”微信移动应用程序包括运行在任何移动设备上的微信应用,包括手机、平板电脑和手表。有趣但或许并不奇怪的是,鉴于政府正在强迫字节跳动将抖音出售给甲骨文公司,此次的禁令并不适用于“储存在美国的微信移动应用程序用户数据”。这可能是一个迹象,如果微信在美国存储用户数据,禁令将不适用。

In the meanwhile, the DOC indicated that other prohibitive transaction relating to WeChat or TikTok might be identified at a future date. Provided the U.S. Government determines that WeChat’s or TikTok’s illicit behavior is being replicated by another app outside of the current scope of ban, the U.S. President has the authority to consider whether additional orders may be appropriate to address such activities.


In the DOC’s Press Release announcing the actions, the Commerce Secretary stated: “At the President’s direction, we have taken significant action to combat China’s malicious collection of American citizens’ personal data, which promoting our national values, democratic rules-based norms, and aggressive enforcement of U.S. laws and regulations.” 

The Press Release goes on to claim that each App collects vast swaths of data from users, including network activity, location data, and browsing and search histories, and each is “subject to” mandatory cooperation with the intelligence services of the Chinese Communist Party. Ironically, one might wonder why the U.S. government has not taken a similar interest in the collection activities of major U.S. tech companies like Facebook and Google.  Each of these companies collect similar kinds of user data, and each frequently surrenders this information to the U.S. government.  In fact, during the first half of 2019, Facebook reported that the number of government demands for user data increased to 128,616 in the first half of the year. The U.S. government led the way with 50,741 demands for user data resulting in some information being shared in 88% of the requests. Reportedly, two-thirds of those requests came with a gag order, preventing the company from telling users about the request for their data. Facebook tracks and reports these government requests in an online report that you can obtain at

With TikTok and WeChat historically outside of this jurisdiction, the U.S. government did not enjoy those same privileges. Now, as Tiktok commits to store such data in the U.S., this situation is likely to change.  How WeChat responds shall be interesting to observe.  But, for now, users in the U.S. can continue to use the voice and messenger services offered by WeChat for personal and business reasons. 


As of the writing of this Alert, a federal judge has temporarily blocked the President’s Executive Order banning downloads of WeChat. In the Preliminary Injunction, the court found that WeChat users’ First Amendment rights may be threatened by the President’s Order and the government had not shown how the Order was narrowly tailored to resolve the Administration’s national security concerns. While the preliminary injunction only temporarily suspends on the President's ban on downloading the WeChat App, the court order has no impact on using WeChat for personal and business communications, as that was already permitted by the DOC’s rules.


This remains a fluid situation. We will continue to follow and report any new developments.


Dickinson Wright Law Firm

Contact: Mark Heusel: Member & China Practice Group Chair




About Mark: Mark Heusel is an experienced commercial business attorney and serves as the Chair of the Firm’s China Practice Group. He has more than 25 years of experience in representing multi-national companies in the manufacturing, retail and automotive industries. Mr. Heusel’s experience includes advising foreign companies in the areas of foreign direct investment in the United States, business formation, Greenfield investment, international trade, commercial transactional matters, and dispute resolution. In his role as International Practice Group Chair, he serves as general counsel to companies throughout Asia and Europe, directing the firm’s resources to better assist his clients. 

Mr. Heusel began his legal career by representing clients in a variety of litigation matters in state and federal courts and in various domestic and international arbitral forums. With more than 20 years of litigation experience, particularly in the areas of contract disputes, supply chain litigation, employment matters (including discrimination and wrongful discharge litigation), commission disputes, personal injury, and real estate and land use litigation, he gained invaluable first-chair experience in understanding and recognizing how a company’s success may be impacted by business disputes. Leveraging this experience, Mr. Heusel focused his career on assisting foreign companies entering the North American market. His interests and passion for helping companies in a proactive manner led to his current position as International Practice Group Chair, where he now has the opportunity to advise and counsel clients entering or expanding their businesses in North America. 




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