TikTok, ByteDance sue to block U.S. law calling for app to be sold or banned By Reuters

David Shepherdson

WASHINGTON (Reuters) – TikTok and its Chinese parent ByteDance filed a lawsuit in U.S. federal court on Tuesday seeking to block legislation signed by President Joe Biden that would force the sale or ban the short-video app used by 170 million Americans. I did.

The companies filed suit in the U.S. Court of Appeals for the District of Columbia Circuit, claiming the law violates the U.S. Constitution on several grounds, including violating the First Amendment’s free speech protections. The law, signed by Biden on April 24, allows ByteDance to sell TikTok by January 19 or face being banned.

“For the first time in history, Congress has enacted a permanent nationwide ban on a single-name voice platform,” the companies said in their lawsuit.

The lawsuit states that a sale is “simply impossible. Commercially, technologically and legally impossible. … There is no question about it. This bill (the law) would force the shutdown of TikTok by January 19, 2025, resulting in a loss of $170 million.” “It will silence hundreds of Americans who use their platform to communicate in ways that cannot be replicated anywhere else.”

The White House has said it wants to see an end to China-based ownership on national security grounds, but does not want to ban TikTok. The White House and Justice Department declined to comment on the lawsuit.

The lawsuit is TikTok’s latest move to get ahead of efforts to shut down TikTok in the U.S. as companies like Snap and Meta seek to leverage political uncertainty on TikTok to siphon advertising dollars from competitors.

The bill passed overwhelmingly in Congress just weeks after it was introduced, fueled by concerns from U.S. lawmakers that China could access data on or spy on Americans through the app. TikTok denies that it has or will ever share U.S. user data, filing a lawsuit alleging “speculative” concerns raised by U.S. lawmakers.

Rep. Raja Krishnamoorthi, the top Democrat on the House Committee on China, said the bill was “the only way to address the national security threat posed by ByteDance’s ownership of apps like TikTok.”

“Instead of continuing the deceptive tactics, it is time for ByteDance to begin the divestiture process,” he said.

The law bans app stores like Apple (NASDAQ:) and Alphabet’s (NASDAQ:) Google from offering TikTok and prohibits internet hosting services from supporting TikTok unless ByteDance sells TikTok by January 19. It is prohibited.

The lawsuit said the Chinese government “has made clear that it will not allow the sale of the recommendation engine that is central to TikTok’s success in the United States.” The companies asked the D.C. Circuit Court to block Attorney General Merrick Garland’s enforcement of the law, saying they were guaranteed “future injunctive relief.”

According to the lawsuit, 58% of ByteDance is owned by global institutional investors including BlackRock (NYSE:), General Atlantic and Susquehanna International Group, 21% is owned by the company’s Chinese founders and 21% is owned by its employees, including about 7,000 Americans. I own this.

Tensions about the Internet and technology

The four-year battle over TikTok is a critical front in the ongoing internet and technology conflict between the United States and China. In April, Apple said China had ordered it to remove Meta Platform (NASDAQ:)’ WhatsApp and Threads from its Chinese app stores, citing national security concerns.

According to the lawsuit, TikTok 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, the agreement includes agreeing to a “closure option” that would give the U.S. government the power to suspend TikTok if it violates some of its obligations.

According to the lawsuit, in August 2022, CFIUS stopped engaging in meaningful discussions about the contract, and in March 2023, CFIUS “insisted that ByteDance should divest its U.S. TikTok business.” CFIUS is an interagency committee chaired by the U.S. Treasury that reviews foreign investments in U.S. businesses and real estate related to national security issues.

In 2020, then-President Donald Trump’s attempt to ban TikTok and Chinese-owned WeChat (a Tencent affiliate) in the United States was blocked by the courts. Trump, the Republican candidate challenging Democrat Biden in the US presidential election on November 5, later changed his stance, saying he did not support the ban but that security concerns must be addressed.

Biden could extend the Jan. 19 deadline by three months if he determines ByteDance is making progress. The fact that Biden’s presidential campaign continues to use TikTok “undermines the argument that the platform poses a real threat to the American people,” the lawsuit said. The Trump campaign does not use TikTok.

Many experts have questioned whether potential buyers have the financial resources to purchase TikTok and whether Chinese and U.S. government agencies would approve the sale.

According to the lawsuit, moving the TikTok source code to the United States “would take years for an entirely new group of engineers to gain sufficient familiarity.”