Department of Commerce Notices on Prohibited Transactions Relating to WeChat and TikTok
On September 18, 2020, the U.S. Department of Commerce (“Commerce”) announced detailed sanctions relating to the mobile applications WeChat and TikTok. These prohibitions were issued in accordance with President Trump’s Executive Orders issued on August 6, 2020, imposing economic sanctions against the platforms under the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.) and the National Emergencies Act (50 U.S.C. § 1601 et seq.). These orders, if they become fully effective, will (1) prohibit mobile app stores in the U.S. from permitting downloads or updates to the WeChat and TikTok mobile apps, (2) prohibit U.S. companies from providing Internet backbone services that enable the WeChat and TikTok mobile apps; and (3) prohibit U.S. companies from providing services through the WeChat mobile app for the purpose of transferring funds or processing payments to or from parties. The sanctions do not target individual or business use of the applications but are expected to degrade the ability of persons in the United States to use the apps for the purposes they were designed to serve.
Court cases were filed by plaintiffs in two separate federal courts in California in early August challenging the Executive Orders relating to WeChat and TikTok. Following the announcement of Commerce’s designation of the transactions as prohibited, on September 19 the plaintiffs in the WeChat case amended their complaint seeking injunctive relief, and the district court magistrate judge handling the case held emergency hearings the same day. Late Saturday night, the judge issued an order preliminarily enjoining Commerce’s actions with respect to WeChat. The government has indicated it plans to appeal that order to the U.S. Court of Appeals for the Ninth Circuit.
Separately, as it relates to TikTok, a tentative agreement was reached whereby TikTok’s parent company would sell a majority interest in TikTok’s U.S. assets to Oracle Corp. and Walmart Inc. Pending further actions, Commerce has suspended its prohibitions relating to TikTok downloads and updates for seven days (until September 27). The other restrictions in Commerce’s TikTok designations were not scheduled to take effect until November 12, and, if the sale to Oracle and Walmart occurs, presumably those other sanctions would not go into effect for TikTok.