TikTok, the short-form video app company owned by China’s ByteDance, has made good on its promise to file a lawsuit challenging US President Donald Trump’s executive order to ban the service unless it is sold to a US buyer.
Trump has alleged that TikTok “continues to threaten the national security, foreign policy, and economy of the United States” based on the assumption that the Chinese government may force TikTok to hand over user data. He also issued a similar order targeting Tencent’s WeChat super app, which erased around $66bn from Tencent’s market valuation.
In the August 6 executive order, Trump banned any business dealings with TikTok by entities under US jurisdiction from September 20 onwards. In a separate executive order, issued August 14, Trump set a 90-day deadline for ByteDance to sell TikTok’s US assets, effectively unwinding the company’s 2017 acquisition of US short video app Musical.ly. Microsoft, Twitter and Oracle are all understood to be interested in acquiring the US assets of TikTok.
However, TikTok said last week it would fight the ban and on Monday (August 24) filed suit in the US District Court in California, claiming that the order is unlawful, unconstitutional and an assault on free speech. The Chinese tech giant is also arguing that Trump is abusing emergency powers that have previously been used to protect the US from threats such as terrorism and weapons of mass destruction.
TikTok’s legal filing stated: “The executive order seeks to ban TikTok purportedly because of the speculative possibility that the application could be manipulated by the Chinese government.
“But, as the US government is well aware, Plaintiffs have taken extraordinary measures to protect the privacy and security of TikTok’s US user data including by having TikTok store such data outside of China (in the US and Singapore) and by erecting software barriers that help ensure that TikTok stores its US user data separately from the user data of other ByteDance products.”
TikTok is also arguing that, while it is owned by a Chinese company, all key personnel for the US operations are American citizens based in the US, including CEO Kevin Mayer, who left Disney to join TikTok in June. The company currently has 1,500 employees in the US and said it plans to hire 10,000 more.
“To be clear, we far prefer constructive dialogue over litigation,” TikTok said in a statement when it announced the lawsuit. “But with the executive order threatening to bring a ban on our US operations – eliminating the creation of 10,000 American jobs and irreparably harming the millions of Americans who turn to this app for entertainment, connection, and legitimate livelihoods that are vital especially during the pandemic – we simply have no choice.”
TikTok says it has more than 100 million monthly active users in the US and more than 700 million worldwide. In China, ByteDance operates a separate version of TikTok, known as Douyin, as well as several other apps including video streaming service Xigua Video and news platform Jinri Toutiao.
Meanwhile, Tencent’s stock rose 5.8% on the Hong Kong Stock Exchange on Monday after White House officials are said to have reassured US businesses that its ban on WeChat may only apply to its overseas operations. US companies such as Apple, Walmart, General Motors, Best Buy and Target all rely heavily on WeChat for reaching customers in China.