TikTok fate in the balance as judge weighs app store ban

By: |
September 28, 2020 9:11 AM

The 90-minute hearing came after President Donald Trump declared this summer that TikTok was a threat to national security and that it either sold its U.S. operations to U.S. companies or the app would be barred from the country.

TikTok, Trump Administration, TikTok app store ban, Donald Trump, Oracle, ByteDance, walmart, WeChat, latest news on tiktokThe two sides of the TikTok deal have also appeared at odds over the corporate structure of TikTok Global. (Photo source: AP photo)

Lawyers for TikTok pleaded with a U.S. federal judge on Sunday to delay the Trump Administration’s ban of the popular video sharing programme from app stores set to take effect at the end of the day, arguing the move would infringe on First Amendment rights and do irreparable harm to the business.

The 90-minute hearing came after President Donald Trump declared this summer that TikTok was a threat to national security and that it either sold its U.S. operations to U.S. companies or the app would be barred from the country.

TikTok, owned by Chinese company ByteDance, is scrambling to firm up a deal tentatively struck a week ago in which it would partner with tech company Oracle and retailer Walmart and that would get the blessing of the Chinese and American governments.

In the meantime, it is fighting to keep the app available in the U.S. The ban on new downloads of TikTok, which has about 100 million users in the U.S, was delayed once by the government. A more comprehensive ban is scheduled for November, about a week after the presidential election. Judge Carl Nichols of the U.S. District Court for the District of Columbia said he would make a decision by late Sunday, leaving TikTok’s fate hanging.

In arguments to Judge Nichols, TikTok lawyer John Hall said that TikTok is more than an app but rather is a modern day version of a town square.” ”If that prohibition goes into effect at midnight, the consequences immediately are grave,” Hall said. It would be no different than the government locking the doors to a public forum, roping off that town square” at a time when a free exchange of ideas is necessary heading into a polarised election.

TikTok lawyers also argued that a ban on the app would stop tens of thousands of potential viewers and content creators every month and would also hurt its ability to hire new talent. In addition, Hall argued that a ban would prevent existing users from automatically receiving security updates, eroding national security.

Justice Department lawyer Daniel Schwei sought to undercut TikTok lawyers’ argument, saying that Chinese companies are not purely private and are subject to intrusive laws compelling their cooperation with intelligence agencies.

The Justice Department has also argued that economic regulations of this nature generally are not subject to First Amendment scrutiny. Plaintiffs can’t claim a First Amendment right in hosting TikTok itself as a platform for others’ speech because merely hosting a platform is not an exercise of the First Amendment, the Justice Department contends.

”This is the most immediate national security threat,” argued Schwei. ”It is a threat today. It is a risk today and therefore it deserves to be addressed today even while other things are ongoing and playing out.” Schwei also argued that TikTok lawyers failed to prove it would suffer irreparable business harm.

The Justice Department laid out its objections to TikTok’s motion for a temporary injunction in a brief under seal, but it was unsealed in redacted form to protect confidential business information.

Trump set the process in motion with executive orders in August that declared TikTok and another Chinese app, WeChat, as threats to national security. The White House says the video service is a security risk because the personal information of its millions of U.S. users could be handed over to Chinese authorities.

Trump has said he would approve a proposed deal in which Oracle and Walmart could initially own a combined 20 per cent of a new U.S. entity, TikTok Global. Trump also said he could retract his approval if Oracle doesn’t have total control.

The two sides of the TikTok deal have also appeared at odds over the corporate structure of TikTok Global. ByteDance said last week that it will still own 80 per cent of the U.S. entity after a financing round. Oracle, meanwhile, put out a statement saying that Americans will be the majority and ByteDance will have no ownership in TikTok Global.

Chinese media have criticised the deal as bullying and extortion, suggesting that the Chinese government is not happy with the arrangement. ByteDance said Thursday it has applied for a Chinese technology export license after Beijing tightened control over exports last month in an effort to gain leverage over Washington’s attempt to force an outright sale of TikTok to U.S. owners.

China’s foreign ministry has said the government will ?take necessary measures to safeguard its companies but gave no indication what steps it can take to affect TikTok’s fate in the United States. TikTok is suing the U.S. government over Trump’s Aug. 6 executive order, saying it is unlawful. So are resulting Commerce Department prohibitions that aim to kick TikTok out of U.S. app stores and, in November, essentially shut it down in the U.S., it claimed.

The Chinese firm said the president doesn’t have the authority to take these actions under the national-security law he cited; that the ban violates TikTok’s First Amendment speech rights and Fifth Amendment due-process rights; and that there’s no authority for the restrictions because they are not based on a national emergency.

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