China’s TikTok sues US to ensure its presence in video app business

TikTok and its parent company ByteDance has filed a case in U.S. federal court seeking to block a law signed by President Joe Biden in order to ensure its presence in the United States.

TikTok customers on smartphone
@Freepik

The law would force China-based ByteDance to sell or face a ban on the short video app used by 170 million Americans. A ban on TikTok will impact the financials of several video creators and professionals in the digital advertising business.

TikTok, according to a paid report by Oxford Economics, has contributed $14.7 billion in small-business owners’ revenue in 2023 and $24.2 billion to U.S. gross domestic product in 2023. TikTok supports 224,000 jobs in the United States. Revenue of TikTok has reached $16 billion in the US, according to media reports.

TikTok and ByteDance filed their lawsuit in the U.S. Court of Appeals for the District of Columbia Circuit, saying that the law violates the U.S. Constitution on a number of grounds including running afoul of First Amendment free speech protections. The law, signed by Joe Biden on April 24, gives ByteDance until Jan. 19 or 270 days to sell TikTok or face a ban, Reuters news report said.

TikTok’s lawsuit said the divestment “is simply not possible: not commercially, not technologically, not legally. … There is no question: the Act (law) will force a shutdown of TikTok by January 19, 2025, silencing the 170 million Americans who use the platform to communicate in ways that cannot be replicated elsewhere.”

The White House has said it wants to see Chinese-based ownership ended on national security grounds but not a ban on TikTok. Interestingly, White House has never produced proof to say that use of TikTok will pose challenges. White House fears that China will be tracking TikTok customers.

The lawsuit is the latest move by TikTok to keep ahead of efforts to shut it down in the United States as companies such as Snap and Meta Platforms look to capitalize on TikTok’s political uncertainty to take away digital advertising business from their rival.

TikTok has denied that it has or ever would share U.S. user data, accusing American lawmakers in the lawsuit of advancing “speculative” concerns.

TikTok has spent $2 billion to implement measures to protect the data of U.S. users and made additional commitments in a 90-page draft National Security Agreement developed through negotiations with the Committee on Foreign Investment in the United States (CFIUS), according to the lawsuit.

Representative Raja Krishnamoorthi, top Democrat on a House committee on China, said the legislation is “the only way to address the national security threat posed by ByteDance’s ownership of apps like TikTok.”

The law prohibits app stores like Apple and Alphabet’s Google from offering TikTok and bars internet hosting services from supporting TikTok unless ByteDance divests TikTok by Jan. 19.

TikTok says 58 percent of ByteDance is owned by institutional investors including BlackRock, General Atlantic and Susquehanna International Group, 21 percent owned by the company’s Chinese founder and 21 percent owned by employees – including about 7,000 Americans. This shows that TikTok is not even majority owned by China.

Baburajan Kizhakedath

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