September 26, 2020

Building Your Inovation

TikTok, the video-sharing app that’s moved to the center of the economic conflict between the...

TikTok, the video-sharing app that’s moved to the center of the economic conflict between the US and China, is planning to challenge the executive order issued by President Donald Trump that would force the sale or ban the service in the United States.

According to a report from National Public Radio yesterday, TikTok could file a federal lawsuit challenging the order as soon as Tuesday. The lawsuit is expected to be filed in the U.S. District Court for the Southern District of California, where TikTok has its American headquarters.

TikTok will challenge the constitutionality of the ban and its underlying claims that the video sharing service represents a national security threat to the country, according to NPR’s report.

TikTok did not respond to a request for comment at the time of publication.

On Thursday, the President signed executive orders that put a 45-day deadline on American companies to unwind their business relationships with TikTok’s parent company, Bytedance, and with WeChat, the messaging service owned by Chinse tech giant, Tencent.

TikTok had already laid out its opposition to the executive order when news first broke that the President had signed it.

As TechCrunch reproted, the company said the order was “issued without any due process” and would risk “undermining global businesses’ trust in the United States’ commitment to the rule of law.” The mechanisms the White House wants to use to ban the app include the International Emergency Economic Powers Act and the National Emergencies Act. But claiming that the operations of a subsidiary of a foreign business on US soil constitutes a national emergency is highly unprecedented.

Under the International Emergency Economic Powers Act, which was passed during the Iran hostage crisis in 1976, the President has sweeping authority to issue tariffs and suspend economic relationships with other companies.

Any challenge to the executive order needs to come soon, because Bytedance, TikTok’s parent company is also looking at how to unwind its US operations through a sale.

After the President’s executive order was announced, Microsoft said in a statement that it was in talks with Bytedance about acquiring TikTok.

Microsoft said:

“Following a conversation between Microsoft CEO Satya Nadella and President Donald J. Trump, Microsoft is prepared to continue discussions to explore a purchase of TikTok  in the United States. Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Analysts and bankers have said that TikTok’s US business could be worth anywhere from $20 billion to $50 billion, thanks to the company’s user base of over 100 million customers in the US, according to reports in Fortune.

And other bidders are emerging for TikTok’s US business as well. According to The Wall Street Journal, TikTok has also engaged in preliminary discussions with Twitter over a possible combination.

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