TikTok Inc. v. Trump

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By an executive order issued on August 6, 2020, President Trump followed through on his threat by barring ByteDance, the parent company of TikTok from conducting business transactions with other American companies. The prohibition begins 45-days from the date of the order. The Trump administration has alleged that TikTok “automatically captures a vast swath of information from its users… [t]his data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information…”

On August 24, 202, TikTok and ByteDance directly challenged the executive order by filing a lawsuit against President Trump, Secretary Wilbur Ross, and the U.S. Department of Commerce in federal court in California. This lawsuit is the culmination of an ongoing conflict between the Trump administration and the popular video-sharing app. President Trump and his advisers have focused on TikTok in recent months as they ramped up their attacks on technology companies that they say are beholden to the Chinese government. TikTok has strongly objected to the Trump administration’s claim that its platform poses a national security threat. In the complaint, TikTok and ByteDance (the “Plaintiffs”) argued that, “[t]he executive order seeks to ban TikTok purportedly because of the speculative possibility that the application could be manipulated by the Chinese government. But, as the U.S. government is well aware, Plaintiffs have taken extraordinary measures to protect the privacy and security of TikTok’s U.S. user data, including by having TikTok store such data outside of China (in the United States and Singapore) and by erecting software barriers that help ensure that TikTok stores its U.S. user data separately from the user data of other ByteDance products.”

In the complaint, and contesting the Trump administration’s contention under the executive order, the Plaintiffs alleged, among other things, that:

1. TikTok has implemented safeguards to help protect the privacy and security of U.S. user data. The Plaintiffs stated that “TikTok has been structured to help protect the privacy and security of U.S. user data,” and “[t]he current version of TikTok made available in the United States stores all U.S. user data on servers in the United States and Singapore, where it is segregated from data relating to other ByteDance products and services by software-based controls. TikTok does not store any U.S. user data in China.” The Plaintiffs further stated that TikTok is committed to prioritizing the privacy and security concerns of its users in the U.S. market and that “key personnel responsible for TikTok, including its CEO, Global Chief Security Officer, and General Counsel, are all Americans based in the United States—and therefore are not subject to Chinese law.”

2. The executive order ignored due process and failed to meet the requirements under the International Emergency Economic Powers Act (IEEPA). The Plaintiff argued that “[b]y banning TikTok with no notice or opportunity to be heard (whether before or after the fact), the executive order violates the due process protections of the Fifth Amendment.” They further argued that “[t]he order is ultra vires because it is not based on a bona fide national emergency and authorizes the prohibition of activities that have not been found to pose ‘an unusual and extraordinary threat’” which is required by the IEEPA under which the Trump administration is purported acting when the executive order was issued. TikTok believes that such an executive order is a misuse of IEEPA. Specifically, in the August 6, 2020 executive order issued under IEEPA, TikTok believes that the Trump administration failed to provide evidence of actual threat nor did it provide justification for its punitive actions.

3. TikTok and ByteDance have proactively engaged with the U.S. government and sought to address any conceivable national security concerns. The Plaintiff stated that they have acted in good faith and provided the Committee on Foreign Investment in the United States (“CFIUS”) the voluminous information in response to CFIUS’s questions during an earlier review involving ByteDance’s acquisition of Musical.ly, another China-based video-sharing app. Specifically, “[a]mong other evidence, ByteDance submitted detailed documentation to CFIUS demonstrating TikTok’s security measures to help ensure U.S. user data is safeguarded in storage and in transit and cannot be accessed by unauthorized persons—including any government—outside the United States.” Plaintiff alleged that “CFIUS never articulated any reason why TikTok’s security measures were inadequate to address any national security concerns, and effectively terminated formal communications with Plaintiffs well before the conclusion of the initial statutory review period. Notwithstanding the U.S. government’s failure to identify any security risk, in an effort to address any conceivable concerns that the U.S. government may have and to assure continuity for the U.S. users who had come to value and cherish the platform that TikTok provides, Plaintiffs took the extraordinary step of offering to restructure their U.S. business…” The Plaintiffs further alleged that the Trump administration also disregarded the information that had been provided to the government, as well as the mitigation proposals made by TikTok, when it issued the August 6, 2020, executive order.

4. The background and timing of the executive order plainly suggest that it was designed not for a bona fide national security reason but instead to further President’s Anti-China political campaign. The Plaintiff alleged that “[t]he executive order is not rooted in bona fide national security concerns. Independent national security and information security experts have criticized the political nature of this executive order, and expressed doubt as to whether its stated national security objective is genuine…” Furthermore, “[t]he President’s demands for payments have no relationship to any conceivable national security concern and serve only to underscore that Defendants failed to provide Plaintiffs with the due process required by law.” The Plaintiffs argued that the President’s action “clearly reflects a political decision to campaign on an anti-China platform” and the executive order is another manifestation of such rhetoric along with the President referring to COVID-19 as the “Wuhan virus,” “China virus,” and “Kung flu.”

Under the complaint, the Plaintiffs are seeking a declaratory judgment that the August 6, 2020 executive order is unlawful and unconstitutional; as well as a preliminary and permanent order enjoining the government from implementing and enforcing the August 6, 2020 executive order.

Separately on August 24, 2020, a U.S.-based TikTok employee also filed a lawsuit against the Trump administration, arguing the executive order unlawfully jeopardized his family’s livelihood and asking for an order to ensure that TikTok employee will continued to be paid despite the restrictions under the executive order.

In addition to these lawsuits relating to the executive order, the Trump administration has also been sued by a group of U.S.-based WeChat users over a similar executive order issued on the same day (August 6, 2020) banning U.S. transactions with WeChat, the messaging app owned by Tencent Holdings. The WeChat app is popular among Chinese and Chinese-American users.

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Lawyers at YK Law have substantial experience advising and assisting clients with litigation and compliance matters, including those involving CFIUS review. Please contact us for additional information regarding our practices and areas of expertise.

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