The Cyberspace Administration of China (“CAC”) has issued new rules regulating apps for smartphone/mobile devices, the Rules on the Management of Mobile App Information Services (“App Rules,” available here, preceded by a Q&A section, all in Chinese), that will come into effect on August 1, 2016. The App Rules are aimed primarily at regulating the rapidly growing app market and addressing corresponding data privacy issues. Among other things, they impose data privacy, cybersecurity, and content monitoring requirements on app and app store providers.

App providers are required to authenticate the identities of their users—tying their online profiles to verified phone numbers or other information that can be used for identification purposes—and retain users’ activity logs for sixty days (Art. 7). They are required to obtain “relevant qualifications” (Art. 5), a term that is not defined but may be interpreted as qualifications (e.g., licenses) required under other laws and regulations that specifically regulate the type of service rendered by a given app. For instance, according to one commentary (Chinese), video streaming, health service, and news service app providers may need different licenses from the respective regulatory agencies. Further, app providers must adhere to certain data privacy rules, and they must establish systems for monitoring content on their platforms in order to detect information that is considered illegal under Chinese law, and take steps to halt further distribution, keep records, and file reports with relevant authorities (Art. 7). Impermissible content may include posts by users that disseminate obscene or pornographic material, instigate ethnic hatred, relate to gambling or fraud, or are politically sensitive.

Meanwhile, the App Rules also regulate app stores. They require app stores to establish stricter cybersecurity practices, audit app providers and make certain filings with provincial authorities. App stores must monitor app providers to protect user information, ensure the legality of published content, and protect and respect the intellectual property rights of app providers (Art. 8). App stores must also make certain filings with CAC’s provincial counterparts within 30 days of beginning online operations (Art. 5).

Companies looking to thrive in China’s mobile app market are advised to pay close attention to these new rules both to ensure compliance and remain competitive in the evolving business environment.

Tina Zhang, Addison Yang, and Steven Zhu of Covington & Burling LLP assisted with the research and preparation of this article.