TikTok has always been in a race against time. The competitive landscape in social media is unrelenting, and any true challenge to Facebook’s market dominance needs to scale up quickly and appeal to both users and advertisers. TikTok has done that, growing at an impressive rate and building inroads for brands that want to reach young devotees.
But now, the clock is ticking for TikTok because of President Donald Trump.
TikTok’s owner, ByteDance, has until Sept. 20 to sell off the app’s U.S. operations to another company—most likely Microsoft, though Twitter is in the mix too—or it will be hit with the full force of an expansive executive order that would severely limit the company’s ability to do business in America because of concerns over data security and alleged ties to the Chinese government.
In an unsigned statement, ByteDance threatened legal action over the order, which it says ignores the company’s due process rights and “sets a dangerous precedent for the concept of free expression and open markets.” NPR reported that a lawsuit could come as soon as Tuesday, citing an unnamed source working on the suit.
While a Microsoft acquisition could ameliorate many of TikTok’s regulatory woes, it won’t erase the massive legal questions undergirding Trump’s executive order, questions that fuse national security law, international business rules and court precedent concerning free expression. We talked to tech policy experts and legal scholars to break down some of the central issues at play.
A foreign threat?
Trump’s power to issue the executive order derives from a 1977 law called the International Emergency Economic Powers Act, or IEEPA, in which Congress granted the chief executive discretion to take outsize action in the face of an “unusual and extraordinary threat” from a foreign-based company.
But it’s unclear whether IEEPA could include regulating TikTok. The law specifically excludes “any postal, telegraphic, telephonic, or other personal communication, which does not involve a transfer of anything of value.” Kurt Opsahl, general counsel for the Electronic Frontier Foundation, said the order doesn’t address this statutory exemption and said he thinks it’s “unconstitutional to ban the use and distribution of TikTok.”
However, Michael Greenberger, a law professor who directs the Center for Health and Homeland Security at University of Maryland Carey School of Law, said TikTok’s data transfer could constitute a transfer of value.
Though IEEPA rulings often afford the government broad powers under the guise of national security, the broad language in Trump’s executive order is a stretch, said Jim Lewis, who directs the Technology Policy Program at the Center for International and Strategic Studies, a foreign policy think tank.
“They wrote it in a way to make it seem like it could catch more than it actually could catch,” Lewis said. “I’m not sure some of that would stand up in court.”
How TikTok defended itself before
TikTok has spent significant time, energy and money distancing itself from China over the past year as criticism over how the app stored user data increased in Washington.
While the company was based in China, spokespeople now routinely claim its operations have moved to the Cayman Islands, one of many ways the company has pushed back against Washington’s concerns that it’s in Beijing’s pocket. ByteDance claims the Chinese government has neither requested nor received information from the company about U.S. users and maintains that U.S. user data is stored in northern Virginia.
TikTok has also staffed up in the U.S., hiring more than 1,000 employees and numerous American executives, including new CEO Kevin Mayer, who joined the company from Disney, and greatly expanded its U.S. lobbying efforts.