ByteDance backed TikTok has filed a lawsuit in federal court for the Central District of California against the Trump administration after the US President ordered a ban on the video-sharing app’s US operation if it does not find a US buyer within 90 days.
TikTok lawyers said the company has “taken extraordinary measures to protect the privacy and security of TikTok’s US user data” and that it has explained those efforts to the federal government during a recent national security review.
ByteDance’s Inner Turmoil
According to Chinese media LatePost, under continued pressure from President Donald Trump, major disagreements have emerged within the global board of directors over how TikTok should handle the problem: all shareholders except Zhang Yiming, the company’s founder and CEO, have demanded that TikTok be sold off for safety.
LatePost cited a source familiar with the matter saying: “Zhang Yiming had different views with US investors on TikTok’s US business. There have been heated debates at the board meeting recently.”
Zhang had previously declined the separation of TikTok’s US operation back in 2019 when the board suggested the option, as the CFIUS just started to investigate ByteDance’s acquisition of Musical.ly. The source said Zhang was determined in his attitude and claimed the separation would damage the overall unity of the company’s global platform.
According to Reuters, some ByteDance investors, including GA (Trans Atlantic Capital), are in discussions to swap their stake in Bytedance China for that in TikTok. Under such a restructuring, the investors would take control of TikTok and include US companies such as Microsoft or Oracle as minority shareholders in the hope that the Trump administration would drop its ban on TikTok.
Business Insider reported that court documents showed that Microsoft had signed a “non-binding letter of intent” to acquire TikTok’s US operations on July 30, the day before news broke that Trump planned to block TikTok’s US operations.
Zhang previously also said in an internal letter that what the US actually wants is a full ban, not a sale of TikTok’s US operations.
The US Magnate Behind the Crackdown
According to the Wall Street Journal, Mark Zuckerberg, founder and CEO of Facebook, hammered the idea of Chinese internet companies’ threat on the US behind the scenes in meetings with officials and lawmakers last fall. Zuckerberg reportedly had the agenda of raising the alarm about the “TikTok threat” during the October trip and a separate visit to Washington weeks earlier, according to people familiar with the matter.
In a speech given to Georgetown University students, the tech magnate said TikTok does not share Facebook’s commitment to freedom of expression, and represents a risk to American values and technological supremacy.
Sources also said Zuckerberg made the case to President Trump that the rise of Chinese internet companies threatens American business, and should be a bigger concern than reining in Facebook. Politicians Zuckerberg met with also include Senator Tom Cotton and Senator Chuck Schumer, who wrote a letter to intelligence officials demanding an inquiry into TikTok.
It remains unclear how Zuckerberg’s remarks played into the White House’s hostile policy and scrutiny against TikTok. Facebook spokesman Andy Stone said Mr. Zuckerberg has no recollection of discussing TikTok at the dinner. Stone also claimed in a written statement that Facebook is committed to continued competition with rising Chinese companies because of “the risk of a global internet based on their (China’s) values, as opposed to ours.”
Highlights of TikTok’s Complaint
In the complaint, TikTok alleged that the executive order Trump signed on Aug. 6 was “heavily politicized”, and that it abused the US International Emergency Economic Rights Act (IEEPA). “By banning TikTok with no notice or opportunity to be heard (whether before or after the fact), the executive order violates the due process protections of the Fifth Amendment,” the complaint says.
The complaint also pointed to the fact that Trump’s Aug. 6 executive order is a misuse of IEEPA for the actions directed should not fall into the emergency declared a year earlier in Executive Order 13873. While the previous executive order was designed to address asserted US national security concerns about certain “telecommunications companies”, TikTok denies it is a telecommunications provider, thus the citation does not apply.
TikTok stated it has taken numerous steps to protect the privacy and security of TikTok’s US user data, including storing it outside China (the US and Singapore), and has taken technical steps to ensure that TikTok’s US user data is stored separately from ByteDance’s other products, according to the complaint.
The company also mentioned that during the CFIUS review of Bytedance’s 2017 acquisition of Musically.ly, TikTok has provided voluminous documentation and information that are more than sufficient to address any US government concerns about privacy and national security.
TikTok further accused CFIUS that it “failed to follow due process and act in good faith, neither providing evidence that TikTok was an actual threat, nor justification for its punitive actions”, while citing experts to criticize the “political nature of this executive order”, and expressed doubt as to “whether its stated national security objective is genuine”.
The company said at the end of its press release that it far preferred constructive dialogue over litigation, but “has no choice” as the executive order threatens more than 10,000 American jobs and its lively usership.