The Trump administration's deadline for ByteDance to close a deal in the U.S. is around the corner and TikTok says it hasn't gotten an update in weeks.
The Committee on Foreign Investment in the United States (CFIUS) had set November 12 as the last date to close a business deal, but it didn't specify what would happen if things fell through.
That's what led TikTok to file a petition in the Court of Appeals for the D.C. Circuit on Tuesday. They're calling for a review of CFIUS and a 30-day extension on the deadline.
"With the November 12 CFIUS deadline imminent and without an extension in hand, we have no choice but to file a petition in court to defend our rights and those of our more than 1,500 employees in the US," TikTok told the Associated Press in a written statement.
In September, Beijing-based ByteDance announced it would sell part of its business to Walmart and Oracle, a plan Trump approved. His administration calls TikTok a national security threat, accusing the video platform of sharing user data with the Chinese Communist government, which the company denies.
The move could buy the Chinese company time as Trump is set to leave office early next year. An advisor to president-elect Joe Biden told CNBC it was "too early to say" Biden's thoughts on the social media app.
Meanwhile, TikTok's former CEO Kevin Mayer, who left amid sustained pressure from the Trump administration, has joined Len Blavatnik's investment firm Access Industries as a senior advisor.
His role will place him at the center of media and entertainment deals — Access has stakes in giants like Warner Music Group, audio streaming service Deezer and DAZN, a sports streaming service. Mayer, a former Disney executive, left TikTok after just under three months on the job.
"I look forward to helping Access build on the success of its leading media and entertainment businesses as a key component of my future endeavors," Mayer said in a statement announcing the news.
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Attorneys representing a TikTok employee asked a federal judge late Thursday to hit pause on the viral video app's ban while his lawsuit against President Donald Trump is heard.
The motion stems from a federal lawsuit filed by U.S.-based TikTok technical program manager Patrick S. Ryan in the U.S. District Court of the Northern District of California last month, after Trump issued an executive order banning any "transactions" with the popular social media app over national security concerns.
"(Ryan) and other U.S. employees of TikTok are in imminent danger of losing their livelihood through governmental action that has no basis in fact, was politically driven, and afforded (Ryan) no procedural protections," the filing for the injunction states.
Trump's August 6 order put a 45-day clock on a ban of the popular social media app, owned by China-based ByteDance Ltd. The Administration has pushed for ByteDance to sell TikTok to a U.S.-based company over national security concerns that it is sharing data with the Communist government.
In his lawsuit, Ryan accuses Trump of violating his Constitutional rights and defaming and disgracing U.S.-based TikTok Inc. employees by painting them as working for the Chinese Communist Party. While Ryan's lawsuit was filed the same day as TikTok's own separate federal suit against the president, the Culver City-based company has yet to file a request for a preliminary injunction.
The executive order's ban on unspecified "transactions" technically prevents TikTok Inc. from paying its 1,500 U.S.-based employees their wages and salaries when it takes effect on Sept. 21, the lawsuit states. The U.S. Department of Commerce doesn't need to define the term transaction until the day the order takes effect, making it unclear if it will ultimately exempt wages and salaries for employees.
"The 1,500 TikTok employees working in the U.S. and their families will not be able to pay their rent or mortgages, or pay for food, medical treatments, and other essentials of life," Thursday's court filing states. "The executive order has offered no evidence that TikTok has breached national security interests, is capable of breaching national security interests or is about to breach national security interests."
Many of the 1,500 employees are new, as TikTok expanded from 300 employees a year ago to five times that number today. The order also jeopardizes the immigrant visas of employees in the U.S. on H1B visas that require an employer to sponsor them, the lawsuit alleges.
The lawsuit is believed to be the first time an employee has sued the president over an executive order, according to Alexander Urbelis, partner at Blackstone Law Group LLP, which filed the request for a preliminary injunction.
Thursday's filing argues that the executive order should be voided because it is speculative about the national security concerns and vague in such a way that it's impossible for anyone to know what can or cannot be done.
Trump's executive order states any effort to violate the order is prohibited and deemed a "conspiracy," but does not elaborate further.
"We don't know what kind of actions are actually prohibited," Urbelis said. The language "can have a chilling effect on people going to work and doing their jobs because it could arguably make doing someone's job and getting paid for it into a criminal conspiracy."
The penalties for such a violation are not trivial. A violator can be fined up to $1 million or up to 20 years in prison. The filing also raises equal protection concerns: That TikTok employees are being treated differently simply because they work for "what's perceived to be a Chinese company," Urbelis said.
Moreover, the filing argues that because the law's language is imprecise, its enforcement can be arbitrary or discriminatory.
"You can essentially pick and choose to whom the law will apply," Urbelis said. "You can say it applies to this party, but not that party, or people who work for a Chinese or Russian company. (But) the law has to apply equally to all persons, it should not be arbitrary."
Trump issued a second executive order on Aug. 14 giving ByteDance 90 days to divest itself of its U.S. TikTok operations. Trump has said he supports the potential acquisition of TikTok by Oracle, though ByteDance has reportedly been in talks with multiple interested suitors, including Microsoft and Walmart vying for the purchase. Amid those talks, TikTok CEO Kevin Mayer resigned last week.
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'It's a Nightmare Either Way': Triller Co-Owner Sees Trouble Ahead for TikTok, Even if It Is Sold
Triller co-owner Ryan Kavanaugh isn't shy about the troubles he sees in TikTok's future, even if it is picked up by a new owner.
"It's a nightmare either way," he said. "With Kevin stepping down I think you're going to see by early next week TikTok announcing a deal."
Kavanaugh's L.A.-based investment firm Proxima Media acquired L.A.-based Triller in 2019. After the sudden departure of TikTok's CEO Kevin Mayer, Kavanaugh suggested the ex-Disney executive's rosy worldview blinded him to the possibility that he was in charge of expanding the reach of a Chinese spying company.
"I don't think (Mayer) realized he was stepping into a political nightmare," Kavanaugh added. "He was Disney; he's the very essence of U.S.A., in the sense of his personal brand. My opinion is that it got to be enough and he said, 'This is Chinese spyware and there's no way around it'."
About 100 TikTok top stars have already migrated to Triller, Kavanaugh said.
Even if TikTok is sold, that may not resolve the data privacy and security issues underlying the U.S. government's concern with the company, Kavanaugh said. Stratechery, a tech blog focused on the business and strategic side of technology, recently wrote that "all Chinese internet companies are compelled by the country's National Intelligence Law to turn over any and all data that the government demands, and that power is not limited by China's borders."
TikTok has denied allegations that it provides data to the Chinese government or enables the Chinese Communist Party (CCP) to manipulate the content that the app serves up to its nearly 700 million global users (about 100 million of whom are in the U.S.).
Yet many independent groups and media reports have highlighted concerns about the CCP's mandated access routes to Chinese tech companies' data. Kavanaugh suggested that compliance with these laws requires some companies to provide China's government backdoor access to their technological infrastructure. If China does have access to TikTok's data, as Kavanaugh suggested, it would be difficult for an acquiring company to identify that access point, let alone remove it quickly, he said.
"It would take many years for even the biggest of the biggest tech companies in the world to go through that amount of code and data and confirm that there is no […] backdoor into the Chinese government in any way," Kavanaugh said.
Some companies, particularly social media behemoths, could potentially skirt that issue since they wouldn't need to take on the entirety of TikTok's technological infrastructure, Kavanaugh noted. But antitrust laws would likely preclude such a merger.
So, said Kavanaugh, maybe Triller should take it over along with its growing ranks of influencers.
"It'd have to be someone like us (to take over the company)," he said. "We could say, 'We don't need your tech' — meaning we just need help in making sure whatever pieces of our tech need to be tweaked to give that user experience that might be a little different."
Since acquiring music-centric Triller, Kavanaugh said, the app has become more of a social media application. With a recent bump in user growth and concern over TikTok's technology, Triller is increasingly being seen as a credible rival.
"It'll be interesting, when they announce who the buyer is, how they get the U.S. government confident that there isn't spyware," Kavanaugh said, "because it's impossible to do if you take the tech."
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Sam Blake primarily covers media and entertainment for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA
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