ByteDance, the Chinese parent company of video-sharing app TikTok, filed a petition late on Tuesday with a US appeals court challenging a Trump administration order set to take effect on Thursday requiring it to divest TikTok.
President Donald Trump in a 14 August order directed ByteDance to divest the app within 90 days, which falls on Thursday. The Trump administration contends TikTok poses national security concerns as the personal data of US users could be obtained by China’s government. TikTok, which has over 100 million US users, denies the allegations.
In the petition filed with the US court of appeals for the District of Columbia, ByteDance said it is seeking a court review of the divestment order, claiming that the order and a finding by a US agency that TikTok represented a security threat were unlawful and violated rights under the US constitution.
ByteDance, which has been in talks for a deal with Walmart and Oracle to shift TikTok’s US assets into a new entity, also said it is requesting a 30-day extension on the 14 August divestment order, so that it can finalise terms of the deal.
“Facing continual new requests and no clarity on whether our proposed solutions would be accepted, we requested the 30-day extension that is expressly permitted in the 14 August order,” TikTok said in a statement. “Without an extension in hand, we have no choice but to file a petition in court to defend our rights.”
In September, TikTok announced it had a preliminary deal for Walmart and Oracle to take stakes in a new company to oversee US operations. Trump has said the deal had his “blessing”. But one big issue that has persisted is over the ownership structure of the new company, TikTok Global, that would own TikTok’s US assets.
Fourth proposal
In its court filing, ByteDance said it submitted a fourth proposal on Friday that contemplated addressing US concerns “by creating a new entity, wholly owned by Oracle, Walmart and existing US investors in ByteDance, that would be responsible for handling TikTok’s US user data and content moderation”.
ByteDance said in its court filing it plans to file a request “to stay enforcement of the divestment order only if discussions reach an impasse and the government indicates an intent to take action to enforce the order”.
The petition names Trump, attorney-general William Barr, treasury secretary Steven Mnuchin and the Committee on Foreign Investment in the United States (CFIUS), the inter-agency panel that reviews certain transactions involving foreign investment on national security concerns.
It says the CFIUS action and Trump order “seek to compel the wholesale divestment of TikTok, a multibillion-dollar business built on technology developed by” ByteDance “based on the government’s purported national security review of a three-year-old transaction that involved a different business”.
A person briefed on the matter told Reuters CFIUS stopped responding to ByteDance soon after Trump’s last public TikTok comments on 19 September. TikTok said on Tuesday it has “received no substantive feedback on our extensive data privacy and security framework”.
The order was based on a government review of ByteDance’s 2017 acquisition of US social media app Musical.ly, which ByteDance merged into TikTok.
ByteDance’s lawsuit also referenced Trump’s comments at a September campaign rally that the parties to the deal would “pay US$5-billion into a fund for education” so that “we can educate people as to the real history of our country”.
ByteDance and Tiktok said in the court filing they have not agreed “to contribute to such a fund”.
Separate restrictions on TikTok from the US commerce department have been blocked by federal courts, including restrictions on transactions that were scheduled to take effect Thursday that TikTok warned could effectively ban the app’s use in the US.
A commerce department ban on Apple and Google offering TikTok for download for new US users that had been set to take effect on 27 September has also been blocked. — Reported by Echo Wang and David Shepardson, (c) 2020 Reuters
