China strengthens regulation of app stores

China enforces a nationwide registration system of app stores, which is one of the steps taken in catching up with its mobile legislation.

On 13 January 2017, the Cyberspace Administration of China (CAC) issued the Notice on the Filings of Internet App Stores (Notice).  By way of this Notice, the Chinese government starts to enforce a nationwide registration system of app stores, which requires registration of any launch, amendment or termination of an app store.

Internet and mobile ecosystems are generally subject to three streams of regulations under the Chinese regulatory regime.

1. MIIT regulates the services

The Ministry of Industry and Information Technology (MIIT) is the primary regulator of the telecoms service providers, which include the providers of basic telecoms services and value-added telecoms services.  Internet and mobile content services are deemed as value-added telecoms services, and therefore subject to licensing or filing requirements from the MIIT, depending on the nature of the services in question.  MIIT reports to the State Council.  

An Internet Content Provider (ICP) license is one of the telecoms licenses granted by the MIIT to the commercial Internet/mobile content providers.  Foreign investment is restricted at 50% in an ICP license holder, other than that an e-commerce operator can be 100% foreign owned.  

An app store operator is required to obtain an ICP license.  

If an app serves any of the following functions with a fee generating purpose, its operator is required to obtain an ICP license:   

  1. information release and distribution: such as a news website, Bulletin Board System (BBS), or mobile newspaper
  2. search service
  3. information community platform and social media service: such as a blog, micro blog, virtual community, chatting room or online games
  4. real-time communication service: such as real-time messages, pictures, documents and audio/video messages, or
  5. information security and processing services: such as spam interception.

The above list is very broad and covers most of the commercial app functions available in the China market.  This indicates the Chinese regulator’s attempt to regulate broader types of commercial services delivered through the mobile network.      

2. CAC supervises the contents

The CAC has become increasingly significant as a Chinese regulatory body governing the cyberspace, in particular the contents delivered in the cyberspace.  The CAC reports to the Central Leading Group for Cyberspace Affairs, which is chaired by the President.  

From 1 August 2016, the CAC requires that:  

  • App developers shall cause their users to register on a real name basis; and app developers are further subject to a number of obligations in relation to data security, personal data privacy, content review, data retention (no less than 60 days) among others, and
  • App store operators shall make a filing with the CAC within 30 days after launching their app stores; conduct an authenticity, security and legality review of the app developers whose apps are made available in their stores; establish a credit management system of these app developers; and urge the app developers to perform their obligations as set out in the preceding paragraph.

The Notice comes after the August requirements to start enforcing the CAC filing requirements of the app stores.  

3. Other regulators

Chinese laws generally prohibit the distribution of content that is considered, among others, to damage the law, national security or national or personal rights.  

Specific regulators such as the State Administration of Press, Publication, Radio, Film and Television, the Ministry of Culture, the Ministry of Education, the National Health and Family Planning Commission and China Food and Drug Administration regulate the online activities in their respective sectors from both a service and a content perspective.  

Conclusion

For a long period of time, mobile contents/services are not as commensurately regulated as such on the Internet in China.  However, the mobile legislations are quickly catching up now, in particular because of the booming mobile economy.  The Notice is issued in this context.  

Online business remains one of the most vibrant fields to attract international investments in the China market.  Private investments into this sector have continued to hit new records in 2016.  There remain various restrictions for the international capital to flow into this sector straight.  International participants need to be diligent in navigating the sector’s complicated and evolving regulations.     

This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document. Simmons & Simmons is registered in China as a foreign law firm. We are permitted by Chinese regulations to provide information on the impact of the Chinese legal environment and also to provide a range of other services. We are not admitted to practise in China and cannot, and do not purport to, provide Chinese legal services. We are, however, able to co-ordinate with local counsel to issue a formal legal opinion should this be required.