Nov 12, 2020
TikTok has Dec. 14 deadline to file documents in sale appeal
ByteDance Ltd., the Chinese owner of TikTok Inc., has a new December deadline to submit documents as part of its court petition seeking to block a U.S.-government-forced sale of the video-sharing app.
The U.S. Court of Appeals in Washington on Thursday set dates of Dec. 14 and 28 for ByteDance and the Trump administration to file motions and other documents in the case.
ByteDance was facing a deadline on Thursday to comply with an order from President Donald Trump to sell TikTok’s U.S. operations. While the company had received tacit approval from the Trump administration about two months ago on an agreement to divest part of TikTok to Oracle Corp. and Walmart Inc., the deal was never finalized. It’s been stuck in limbo for weeks, and was quickly overshadowed by the U.S. election. The delay prompted TikTok to go to the appeals court on Tuesday to prevent a forced sale.
Trump’s order requiring a sale by Nov. 12 allows for a 30-day extension of the deadline but the new dates go past that period. The Commerce Department said on Thursday it won’t enforce its order to shut down TikTok if a sale wasn’t reached by the deadline, citing a federal court ruling in Pennsylvania last month, according to the Wall Street Journal. Lawyers for TikTok and officials at the Treasury Department, which is overseeing the sale, and the Commerce Department didn’t immediately respond to request for comment.
Trump has made the fight over TikTok a central front in a broader trade war with China, in particular an effort to crack down on the growing influence of China’s technology industry in the U.S. Trump first ordered a TikTok sale in August, and threatened to ban the app if ByteDance couldn’t reach an agreement with an American company. That proposed ban has since been delayed twice -- most recently on Oct. 30, when a Pennsylvania judge issued a temporary injunction in response to a lawsuit filed by a group of TikTok users who make their living via the app.
TikTok is one of the most popular apps in the world -- with more than 100 million U.S. users -- and is also ByteDance’s most important service outside of China. The company and its investors are desperate to finish a deal to avoid a ban in what has been a valuable market for other social media apps, like Facebook Inc.’s Instagram and Snap Inc.’s Snapchat.
The way the original order was worded appears to require a divestment from ByteDance to be in place by the deadline -- not just an agreement. If the government does reach an accord with the company, it could exercise discretion around enforcement timing, said Aimen Mir, a partner at Freshfields Bruckhaus Deringer and a former deputy assistant secretary for investment security at Treasury, where he ran reviews for the Committee on Foreign Investment in the U.S.
“Usually when there is extended silence from Cfius, it suggests there’s no clear consensus within government on what the next step would be, but this has been an atypical case for awhile,” Mir said.
If an extension hasn’t already been granted, Mir said the Justice Department would have to go to court and seek enforcement of the divestiture order.
Trump’s executive order from August doesn’t stipulate a clear punishment for failure to divest, but says that “the Attorney General is authorized to take any steps necessary to enforce this order.”
“There could be fines, or it could be as draconian as a ban if the administration wanted to go that far,” said Carl Tobias, a law professor at the University of Richmond. “But the government still has until midnight on Nov. 12 to issue an extension, which is a plausible scenario.”
This sale process was originally brought about because of national security concerns. The U.S. government is worried about ByteDance’s access to the personal data of U.S. citizens.
Cifius, the Treasury Department panel that reviews foreign acquisitions of American businesses, said in a July 30 letter included in ByteDance’s court filing that its security concerns were based on both classified and unclassified information. The letter cited the move by a ByteDance Chinese affiliate in 2017 to establish a Communist Party Committee in its governance structure, and pointed out that ByteDance also collaborates with public security bureaus across China.
“The Treasury Department remains focused on reaching a resolution of the national security risks arising from ByteDance’s acquisition of Musical.ly,” a Treasury spokeswoman said in a statement, referring to the 2017 purchase of an app that ByteDance merged with TikTok. “We have been clear with ByteDance regarding the steps necessary to achieve that resolution.” The Justice Department declined to comment.
Trump’s order requiring the sale of TikTok underscored the aggressive stance his administration has taken toward Chinese investment in the U.S. Only seven foreign acquisitions of American companies have been blocked or unwound by U.S. presidents since 1990, and Trump is responsible for four of them.
Now, the TikTok deal, once a priority for the administration, has in recent weeks taken on less urgency as Trump turned his focus to his bid for re-election and, since last week, challenging the outcome of the Nov. 3 vote.
--With assistance from Kurt Wagner, Shelly Banjo and Jenny Leonard.
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