Dive Brief:
- The U.S. Department of Commerce said in a filing late Thursday that it would comply with a preliminary injunction that threw a wrench in the Trump administration's plans to shut down TikTok, the popular video-sharing app owned by Chinese tech conglomerate ByteDance. The move puts a hold on a ban that was set to take effect midnight of Nov. 12.
- The Oct. 30 injunction issued by Judge Wendy Beetlestone of the U.S. District Court of Philadelphia sided with three TikTok creators who argued they would lose access to their livelihoods and millions of followers in the event of a ban on the app. In her ruling, Beetlestone wrote that the Commerce Department's ban order presented a threat to the "robust exchange of informational materials," and therefore violated the International Emergency Economic Powers Act.
- While the government is appealing the injunction, according to The Wall Street Journal, the news serves as a key victory for TikTok, essentially allowing it to operate as usual as it continues to try and figure out a new structure in the U.S.
Dive Insight:
TikTok's future isn't sorted yet, but the news Thursday notches a significant victory in the app's belt as it wages a legal battle against the Trump administration while also scrambling to lock in a new ownership structure that appeases both U.S. and Chinese officials.
A major concession from the Commerce Department means TikTok will be allowed to function as usual in the near term. Marketers and users, both of which have held fast to the platform despite a rollercoaster ride of scrutiny, are even less likely to abandon TikTok with greater assurances of stability. The development could help enshrine the app's status as a dominant social media player, a position that's been fortified as people spend more time consuming entertainment at home during the coronavirus pandemic.
While the government is appealing the injunction issued by Beetlestone late last month, a growing sentiment among industry watchers and even TikTok is that the platform has become less of a priority for the Trump administration, even as it has served as one of the most significant battlegrounds for the White House's mounting trade war with China. With Joe Biden the clear projected winner of the presidential election, interest in the fight could further fizzle out under a new administration.
On Wednesday, TikTok and its parent company ByteDance filed a petition in the U.S. Court of Appeals claiming they've stopped receiving communication in recent weeks from the Committee on Foreign Investment in the United States, the interagency group in charge of reviewing the app's business. The companies asked for a 30-day extension to iron out an agreement and also pleaded for the court to block the forced divestiture of TikTok's U.S. operations.
In August, President Donald Trump set off a mad scramble by issuing an executive order that pushed ByteDance to divest TikTok's U.S. operations and any data on U.S. users. The Trump administration claims that TikTok could share sensitive personal information with Chinese authorities, an allegation the app fiercely contests, including through a current lawsuit against the government.
The White House ramped up aggression when it put out a separate order that sought to halt new downloads and software updates to TikTok in September, a move that wouldn't have shuttered the service outright but would've ensured its user experience and audience growth quickly deprecated. But that order was blocked at the last minute by Judge Carl Nichols of the U.S. District Court in Washington, who asked TikTok and the U.S. government to propose a timeline for more detailed arguments.
Meanwhile, TikTok continues to try to reach an agreement that will assure U.S. officials that it doesn't pose a threat to national-security and economic interests. President Trump tentatively approved a deal where Oracle and Walmart would take a stake in TikTok, with the enterprise solutions provider becoming the platform's "trusted technology partner" in the U.S.
As part of its petition to the appeals court Wednesday, TikTok said it had submitted a fourth proposal on a plan that would create a separate U.S. unit "wholly owned" by Oracle, Walmart and ByteDance investors based in the states. ByteDance would have a separate TikTok Global unit handling operations in other regions, sources told the Journal, but the proposal is still awaiting the approval of both U.S. and Chinese officials.
