TikTok, ByteDance sue to block US law seeking sale or ban of app
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[May 08, 2024]
By David Shepardson
WASHINGTON (Reuters) -TikTok and its Chinese parent company ByteDance
sued in U.S. federal court on Tuesday seeking to block a law signed by
President Joe Biden that would force the divestiture of the short video
app used by 170 million Americans or ban it.
The companies filed their lawsuit in the U.S. Court of Appeals for the
District of Columbia Circuit, arguing that the law violates the U.S.
Constitution on a number of grounds including running afoul of First
Amendment free speech protections. The law, signed by Biden on April 24,
gives ByteDance until Jan. 19 to sell TikTok or face a ban.
"For the first time in history, Congress has enacted a law that subjects
a single, named speech platform to a permanent, nationwide ban," the
companies said in the lawsuit.
The lawsuit said the divestiture "is simply not possible: not
commercially, not technologically, not legally. ... There is no
question: the Act (law) will force a shutdown of TikTok by January 19,
2025, silencing the 170 million Americans who use the platform to
communicate in ways that cannot be replicated elsewhere."
The White House has said it wants to see Chinese-based ownership ended
on national security grounds but not a ban on TikTok. The White House
and Justice Department declined to comment on the lawsuit.
The lawsuit is the latest move by TikTok to keep ahead of efforts to
shut it down in the United States as companies such as Snap and Meta
look to capitalize on TikTok's political uncertainty to take away
advertising dollars from their rival.
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Driven by worries among U.S. lawmakers that China could access data on
Americans or spy on them with the app, the measure was passed
overwhelmingly in Congress just weeks after being introduced. TikTok has
denied that it has or ever would share U.S. user data, accusing American
lawmakers in the lawsuit of advancing "speculative" concerns.
Representative Raja Krishnamoorthi, top Democrat on a House committee on
China, said the legislation is "the only way to address the national
security threat posed by ByteDance’s ownership of apps like TikTok."
"Instead of continuing its deceptive tactics, it’s time for ByteDance to
start the divestment process," he said.
The law prohibits app stores like Apple and Alphabet's Google from
offering TikTok and bars internet hosting services from supporting
TikTok unless ByteDance divests TikTok by Jan. 19.
The suit said the Chinese government "has made clear that it would not
permit a divestment of the recommendation engine that is a key to the
success of TikTok in the United States." The companies asked the D.C.
Circuit to block U.S. Attorney General Merrick Garland from enforcing
the law and says "prospective injunctive relief" is warranted.
According to the suit, 58% of ByteDance is owned by global institutional
investors including BlackRock, General Atlantic and Susquehanna
International Group, 21% owned by the company's Chinese founder and 21%
owned by employees - including about 7,000 Americans.
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A view shows the office of TikTok in Culver City, California, March
13, 2024. REUTERS/Mike Blake/File Photo
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TENSIONS OVER INTERNET AND TECHNOLOGY
The four-year battle over TikTok is a significant front in the
ongoing conflict over the internet and technology between the United
States and China. In April, Apple said China had ordered it to
remove Meta Platforms' WhatsApp and Threads from its App Store in
China over Chinese national security concerns.
TikTok has spent $2 billion to implement measures to protect the
data of U.S. users and made additional commitments in a 90-page
draft National Security Agreement developed through negotiations
with the Committee on Foreign Investment in the United States (CFIUS),
according to the lawsuit.
That pact included TikTok agreeing to a "shut-down option" that
would give the U.S. government the authority to suspend TikTok in
the United States if it violates some obligations, according to the
suit.
In August 2022, according to the lawsuit, CFIUS stopped engaging in
meaningful discussions about the agreement, and in March 2023 CFIUS
"insisted that ByteDance would be required to divest the U.S. TikTok
business." CFIUS is an interagency committee, chaired by the U.S.
Treasury Department, that reviews foreign investments in American
businesses and real estate that implicate national security
concerns.
In 2020, then-President Donald Trump was blocked by the courts in
his bid to ban TikTok and Chinese-owned WeChat, a unit of Tencent,
in the United States. Trump, the Republican candidate challenging
the Democrat Biden in the Nov. 5 U.S. election, has since reversed
course, saying he does not support a ban but that security concerns
need to be addressed.
Biden could extend the Jan. 19 deadline by three months if he
determines ByteDance is making progress. The suit said the fact that
Biden's presidential campaign continues to use TikTok "undermines
the claim that the platform poses an actual threat to Americans."
Trump's campaign does not use TikTok.
Many experts have questioned whether any potential buyer possesses
the financial resources to buy TikTok and if China and U.S.
government agencies would approve a sale.
To move the TikTok source code to the United States "would take
years for an entirely new set of engineers to gain sufficient
familiarity," according to the lawsuit.
(Reporting by David Shepardson; Editing by Will Dunham and Deepa
Babington)
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