(5)(a) "COVERED APPLICATION" MEANS A CONSUMER SOFTWARE APPLICATION THAT IS ACCESSED THROUGH A COVERED APPLICATION STORE AND THAT MAY BE RUN OR DIRECTED BY A USER ON A DEVICE.

(b) "COVERED APPLICATION" DOES NOT INCLUDE:

(I) A SOFTWARE APPLICATION THAT DOES NOT PROCESS USERS' PERSONAL DATA; OR

(II) AN APPLICATION FROM A FREE, PUBLICLY AVAILABLE CODE REPOSITORY.

On the one hand, I'm absolutely against blanket age verification laws like this one, think there are better ways to solve the stated problem, and believe that the current crop of legislation is being pushed by bad actors for nefarious purposes by means of pandering to public mania.

On the other hand, I do appreciate that a possible unintended consequence of the out provided by (5)(b)(I) could be that PII (along with user generated content in general) becomes similarly radioactive to if the US had passed a GDPR equivalent. Either that or it's used as a justification for every single online service to require government ID in order to interact with it "because liability". Unfortunately I assume the latter is somewhat more likely at this point.

Also is it defined precisely what it means to "process users' personal data"?

That wording could be interesting, because it's ambiguous if free is applicable to the repository or the project. Presumably, the latter. This means you could absolutely do source-open but not open-source and still get around it.