Key Takeaways
- TikTok said on Tuesday it filed a petition in federal court seeking to overturn the U.S. TikTok ban.
- The TikTok ban, signed into law by U.S. President Joe Biden in April, requires ByteDance, the Chinese company that owns TikTok, to divest within a year through a forced sale or face a nationwide ban based on national security concerns.
- The company said the ban is “unconstitutional” and allows Congress to “circumvent the First Amendment by invoking national security.”
- ByteDance said the “qualified divestiture” is “not commercially, not technologically, not legally” possible.
- UBS analysts have indicated that there is “limited opportunity to appeal” for TikTok as it fights against national security concerns.
TikTok reported on Tuesday that it filed a petition in federal court seeking to overturn the U.S. TikTok ban. ByteDance, the Chinese company that owns TikTok, filed a lawsuit with U.S. Attorney General Merrick Garland asking for a review of the constitutionality of the ban.
‘Unconstitutional’
TikTok claimed the law is “unconstitutional,” saying that it is “so obviously unconstitutional, in fact, that even the Act’s sponsors recognized that reality, and therefore have tried mightily to depict the law not as a ban at all, but merely a regulation of TikTok’s ownership.”
Legislation signed into law by U.S. President Joe Biden in April requires ByteDance to divest TikTok within a year through a forced sale or face a nationwide ban based on national security concerns.
The company said that the “qualified divestiture” required by the law is “simply not possible: not commercially, not technologically, not legally,” and that even if it were possible, it would “still be an extraordinary and unconstitutional assertion of power.”
“If Congress can do this, it can circumvent the First Amendment by invoking national security and ordering the publisher of any individual newspaper or website to sell to avoid being shut down,” TikTok said in the filing.
‘Project Texas’
The company also highlighted its efforts to ease the U.S. government’s national security concerns, specifically that TikTok voluntarily invested more than $2 billion into “Project Texas,” an initiative where American user data was isolated inside Oracle (ORCL) servers in the U.S. that communicate with global TikTok systems.
The ban was expected to face legal challenges that are likely to lengthen the time before a forced sale or ban takes effect.
UBS analysts have indicated that there is “limited opportunity to appeal,” citing a former Federal Communications Commission (FCC) commissioner who indicated that the designation of TikTok as a national security risk could be key to limiting legal challenges, saying, “National Security almost always wins.”