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.

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Photo of Ashwin Kaja Ashwin Kaja

With over a decade of experience in China, Ashwin Kaja helps multinational companies, governments, and other clients understand and navigate the complex legal and policy landscape in the country. He plays a leading role in Covington’s China international trade and public policy practices…

With over a decade of experience in China, Ashwin Kaja helps multinational companies, governments, and other clients understand and navigate the complex legal and policy landscape in the country. He plays a leading role in Covington’s China international trade and public policy practices and, outside of Covington, serves as the General Counsel of the American Chamber of Commerce in China.

Ashwin helps clients solve acute problems that arise in the course of doing business in China and position themselves for longer-term success in the country’s rapidly evolving legal and policy environment. He is an expert on Chinese industrial policy and has worked on matters related to a wide range of sectors including technology, financial services, life sciences, and the social sector. Ashwin has also counseled a range of clients on data privacy and cybersecurity-related matters.

As the General Counsel of the American Chamber of Commerce in China (AmCham China), Ashwin serves as a senior officer of the organization and as an ex officio member of its Board of Governors, supporting nearly one thousand member companies in developing their businesses in China and advocating for their needs with China’s central and local governments.

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Photo of Eric Carlson Eric Carlson

Eric Carlson has nearly two decades of experience advising clients operating in China and other jurisdictions in Asia on compliance and investigations matters, particularly in the areas of corruption/FCPA/fraud and export controls/sanctions.

Having lived in China for more than a decade, he has …

Eric Carlson has nearly two decades of experience advising clients operating in China and other jurisdictions in Asia on compliance and investigations matters, particularly in the areas of corruption/FCPA/fraud and export controls/sanctions.

Having lived in China for more than a decade, he has deep experience leading highly sensitive investigations in China and other jurisdictions in Asia, including investigations presenting complex legal, political, and reputational risks. He speaks Mandarin and Cantonese and has led more than four hundred witness interviews in Chinese in 24 provinces in China, and conducted dozens of trainings in Chinese. He is a Certified Fraud Examiner.

Eric also counsels clients on the compliance risks of proposed transactions, conducts compliance due diligence as part of mergers, acquisitions, and joint ventures, assists companies in updating and strengthening their internal compliance programs and tailoring them to the unique features of Asian markets, and developing and presenting tailored compliance training in Chinese and English. Eric has advised scores of companies and organizations representing nearly every major industry.

Eric is a regular speaker on China-related compliance issues. He has been quoted in publications such as The Wall Street Journal, The Economist, The Financial Times, Global Investigations Review, Compliance Week, FCPA Report, The Corporate Treasurer, Commercial Dispute Resolution, China Business Law Journal, and Economy and Nation Weekly and was a contributing editor to the FCPA Blog. Chambers notes that Eric has “much more than just a conversational grasp of the language, but the ability to conduct interviews on specific subject matter details and get to the root of the issues.” Chambers further notes that “his language skills are very impressive” and that he provides “great advice that is grounded in reality,” adding: “They know the industry and their advice is very risk-based and balanced.” One client noted to Chambers: “They have strong regional coverage both in terms of footprint as well as language skills. If I have a compliance investigation in region with a tight timeframe, I know they can get it done. They take a more realistic approach to scoping investigations.” Other clients noted to Chambers that Eric is “really brilliant” and “an expert in this field.” According to one client surveyed by Chambers, “he is particularly adept at ‘right sizing’ the scope of an investigation to get at the key issues without incurring unnecessary operational or financial burden. He is also incredibly responsive to client communications.”

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