Bloomberg News: TikTok filed a lawsuit in the U.S. Court of Appeals in the District of Columbia, applying for the court to stop the presidential order issued by U.S. President Trump on August 14. Require ByteDance to divest TikTok’s US business before November 12.
TikTok issued a statement in response to the new lawsuit that day, stating that although it disagrees with CFIUS’s previous assessment results, TikTok has been actively communicating with CFIUS for a year to resolve its national security concerns. However, CFIUS has not yet provided any substantive feedback regarding the comprehensive data privacy and security framework proposed by TikTok. As the presidential decree is approaching and its execution has not been delayed, TikTok had to appeal to the court to protect the legal rights of the company and its employees.
In this lawsuit, the Committee on Foreign Investment in the United States (hereinafter referred to as “CFIUS”), US President Trump, US Treasury Secretary Mnuchin and US Attorney General Barr became co-defendants. This is the fourth lawsuit initiated by TikTok against the US government.
This prosecution is different from the past. Prior to this, TikTok, its employees and its platform creators have sued the US government three times, mainly against Trump’s first presidential decree issued on August 6 by invoking the International Emergency Economic Powers Act (IEEPA). On September 27 and October 30, two U.S. judges expressed doubts about the ban and temporarily suspended related ban measures.
According to media reports, ByteDance acquired Musical.ly, a short video application for music in 2017, and CFIUS began a post-mortem investigation of this transaction in 2019 on the grounds of affecting national security. On August 14 this year, according to the agency’s recommendation, Trump issued a presidential decree requiring ByteDance to sell or divest TikTok’s U.S. business before November 12. Otherwise, the U.S. Attorney General can forcibly shut down or auction TikTok’s U.S. business .
TikTok claimed in the indictment that after the preliminary agreements reached with Oracle and Wal-Mart were shelved by the US government, TikTok also submitted a new US agency operation plan. According to the plan, TikTok plans to outsource US user data and content review services to a newly established US agency operating company, while the rest of the business will continue to be operated by TikTok. TikTok believes that this generational operation plan can solve all concerns of the US government regarding user data security and platform content, but it was rejected by the US.
According to TikTok, the CFIUS presidential order has a problem of ultra vires, because the order attempts to force the divestment of assets independently developed by ByteDance, which have nothing to do with the Musical.ly acquisition. The information published in the indictment shows that of the 98 million monthly active users of TikTok in the United States, only 3.2 million opened a Musical.ly account before the transaction. Forcing the divestiture of assets other than this part is a serious ultra vires.
TikTok believes that CFIUS did not give TikTok a sufficient opportunity to evaluate or respond to the relevant basis of the presidential order, which violates the principle of due process. In addition, CFIUS neither considered the alternatives proposed by TikTok, nor did it consider or explain why relevant risk mitigation measures could not alleviate its national security concerns and violated TikTok’s legitimate rights and interests.
Industry analysts pointed out that TikTok’s prosecution against CFIUS is difficult and the odds of winning are low. It is understood that due to US law, CFIUS decisions based on national security reasons are generally not subject to judicial review by courts, so few commercial companies initiate direct challenges. Among the hundreds of cases in the entire history of CFIUS review, only Sany Heavy Industry has tried to challenge CFIUS’s decision through court proceedings. Nevertheless, after the successful prosecution of Sany Heavy Industry, it only obtained a due process ruling. In the end, Sany Heavy Industry still divested its US business before reaching a settlement with CFIUS.