TikTok Ban: US Appeals Court Upholds Legislation Forcing Its Sale Forward of Deadline

A U.S. federal appeals court docket on Friday upheld a regulation requiring Chinese-based ByteDance to divest its widespread brief video app TikTok within the United States by early subsequent 12 months or face a ban.

The choice is a significant win for the Justice Department and opponents of the Chinese-owned app and a devastating blow to TikTok dad or mum ByteDance. It considerably raises the prospects of an unprecedented ban in simply six weeks on a social media app utilized by 170 million Americans.

TikTok plans to attraction the choice to the Supreme Court.

In detailing their assist of the regulation, the appeals court docket famous it was the results of Republicans and Democrats working collectively, in addition to two presidents, as “part of a broader effort to counter a well-substantiated national security threat posed by the PRC (People’s Republic of China).”

The Justice Department says beneath Chinese possession, TikTok poses a risk due to its entry to huge private knowledge of Americans, asserting China can covertly manipulate info that Americans eat by way of TikTok.

Attorney General Merrick Garland known as the choice “an important step in blocking the Chinese government from weaponizing TikTok.”

But the Chinese Embassy in Washington called the law “a blatant act of economic theft” and warned the United States “should deal with this case in a prudent method to keep away from harming the mutual belief between the 2 nations and the event of bilateral relations.”

The ruling comes amid growing trade tensions between the world’s two biggest economies after the administration of President Joe Biden placed new restrictions on China’s chip industry and Beijing responded by imposing an outright ban on exports of gallium, germanium and antimony to the United States.

U.S. appeals court Judges Sri Srinivasan, Neomi Rao and Douglas Ginsburg rejected legal challenges brought by TikTok and users against the law, which gives ByteDance until Jan. 19 to sell or divest TikTok’s U.S. assets or face a ban.

Free Speech

“While at present’s information is disappointing, relaxation assured we are going to proceed the battle to guard free speech on our platform,” TikTok CEO Shou Zi Chew said in an email to staff seen by Reuters.

Free speech advocates quickly criticized the ruling. The American Civil Liberties Union said, “Banning TikTok blatantly violates the First Amendment rights of hundreds of thousands of Americans who use this app to precise themselves and talk with individuals around the globe.”

In its analysis, the court said China, through its relationship with TikTok parent ByteDance, threatened to distort U.S. speech through TikTok and “manipulate public discourse.”

China’s “capability to take action is at odds with free speech fundamentals. Indeed, the First Amendment precludes a home authorities from exercising comparable management over a social media firm within the United States.”

The decision — unless the Supreme Court reverses it — puts TikTok’s fate in the hands of first President Biden on whether to grant a 90-day extension of the Jan. 19 deadline to force a sale and then President-elect Donald Trump, who takes office on Jan. 20. But it’s not clear whether ByteDance could meet the heavy burden to show it had made significant progress toward a divestiture needed to trigger the extension — or if the Chinese government would approve any sale.

Trump, who unsuccessfully tried to ban TikTok during his first term in 2020, said before the November presidential election he would not allow the TikTok ban.

Friday’s decision upholds the law giving the U.S. government sweeping powers to ban other foreign-owned apps that could raise concerns about collection of Americans’ data — and could open the door to a future crackdown on many other foreign owned apps. In 2020, Trump also tried to ban Tencent-owned WeChat, but was blocked by the courts.

TikTok Ban Looms

If banned, TikTok advertisers would seek new social media venues to buy ads. As a result, shares of Meta Platforms, which competes against TikTok in online ads, hit an intraday record high following the ruling and closed up 2.4%. Google dad or mum Alphabet, whose YouTube video platform also competes with TikTok, closed up 1.25%.

The court opinion – which was written by Ginsburg, an appointee of President Ronald Reagan, and joined by Rao, who was named to the bench by Trump, and Srinivasan, an appointee of President Barack Obama – acknowledged its decision would lead to TikTok’s ban on Jan. 19 without an extension from Biden.

ByteDance, backed by Sequoia Capital, Susquehanna International Group, KKR & Co, and General Atlantic, among others, was valued at $268 billion in December 2023 when it offered to buy back around $5 billion worth of shares from investors, Reuters reported then.

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 the deadline.

Google declined comment while Apple did not respond to a request for comment.

In a concurring opinion, Srinivasan acknowledged the decision will have major impacts, noting “170 million Americans use TikTok to create and examine all kinds of free expression and interact with each other and the world. And but, partially exactly due to the platform’s expansive attain, Congress and a number of Presidents decided that divesting it from (China’s) management is important to guard our nationwide safety.”

© Thomson Reuters 2024

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