NEW YORK / WASHINGTON (Reuters) – TikTok is preparing for a legal challenge on Monday following President Donald Trump’s executive order banning transactions with the popular short video app and its Chinese parent ByteDance, according to people familiar with the case.
PHILO PHOTO: US flags are seen near a TikTok logo in this illustration photo taken July 16, 2020. REUTERS / Florence Lo
On August 14, Trump issued an executive order giving ByteDance 90 days to disinvest TikTok’s US operations. ByteDance has made progress in talks with potential buyers, including Microsoft Corp and Oracle. Some of ByteDance’s American investors were also able to participate in the winning bid.
The legal challenge from TikTok applies to an earlier executive order, which Trump issued on August 6, the sources said. That order prompted the Secretary of State for Commerce to create a list of transactions involving ByteDance and its holdings that should be banned after 45 days.
TikTok intends to argue that the August 6 executive order’s reliance on the International Act of Emergency Economic Powers Act stems from due process, according to sources. TikTok will also combat the classification by the White House as a national security threat, the sources added.
It was not immediately clear which court TikTok intends to use to file its lawsuit. The company had previously said it was examining its legal options, and its employees were also preparing their own lawsuit.
Although TikTok is best known for its anodyne videos of people dancing and going viral among teenagers, US officials have expressed concern that information about users could be passed on to the Communist government of China.
The sources requested anonymity prior to the filing of the lawsuit. ByteDance declined to comment. A White House spokesman declined to comment.
TikTok’s legal challenge would not protect ByteDance from launching the app. This is because it does not apply to the August 14 order regarding the sale of TikTok, which is not subject to judicial review.
However, the move shows that ByteDance is trying to use all the legal ammunition it has, as it is trying to prevent the TikTok deal negotiations from turning into a fire sale.
The Trump administration has stepped up its efforts to clean up what appear to be “untrusted” Chinese apps from U.S. digital networks. Beyond TikTok, Trump has also issued an order banning transactions with Tencent Holding Ltd’s WeChat.
Trump has said he would support an attempt by Microsoft to buy TikTok’s U.S. operations if the U.S. government received a “substantial portion” of the proceeds, but also said there are other interested potential buyers, such as Oracle.
Report by Echo Wang in New York and David Shepardson in Washington; Edited by Alistair Bell
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