TikTok Faces US Ban After Appeals Court Refuses to Block Law

(Bloomberg) — TikTok’s Chinese parent company faces a ban in the US next month as a result of a federal appeals court ruling Friday, ratcheting up a political clash over the wildly popular video-sharing app.

Most Read from Bloomberg

A three-judge panel in Washington unanimously upheld a new US law, ruling that it didn’t violate free speech protections under the Constitution’s First Amendment. Unless the company is sold, the decision leaves the Supreme Court as the company’s last realistic hope for stopping the ban from taking effect on Jan. 19.

TikTok indicated in a statement on X that it will appeal and expects the justices will side with them on the free-speech issue. “Unfortunately, the TikTok ban was conceived and pushed through based upon inaccurate, flawed and hypothetical information, resulting in outright censorship of the American people,” according to the statement.

Although the ban kicks in the day before President-elect Donald Trump is inaugurated, his opposition to it could still complicate its enforcement. Trump spoke out against a ban as he courted younger Americans in his campaign despite trying to force its sale during his first term.

A representative for Trump didn’t immediately respond to an emailed request for comment. The Justice Department applauded the court’s ruling.

“Today’s decision is an important step in blocking the Chinese government from weaponizing TikTok to collect sensitive information about millions of Americans, to covertly manipulate the content delivered to American audiences, and to undermine our national security,” Attorney General Merrick Garland said in a statement.

The ruling from the US Court of Appeals for the DC Circuit would make it harder for Trump to reverse the ban, according to Matthew Schettenhelm, an analyst for Bloomberg Intelligence. If the company turns to the Supreme Court, Schettenhelm said the justices are unlikely to block the law on an emergency basis.

Congress said the law was necessary to protect national security and user privacy.

“The First Amendment exists to protect free speech in the United States,” Judge Douglas Ginsburg wrote for the panel. “Here the government acted solely to protect that freedom from a foreign adversary nation and to limit that adversary’s ability to gather data on people in the United States.”

Popular App

More than 170 million Americans use TikTok — owned by China-based ByteDance Ltd. — as a source of entertainment and information or as a platform to build their businesses. A Pew Research survey released in September showed about 17% of US adults regularly receive news from the app, representing a fivefold jump from 2020.

Civil liberties groups immediately voiced opposition to the ruling.

“This ruling sets a flawed and dangerous precedent, one that gives the government far too much power to silence Americans’ speech online,” said Patrick Toomey, deputy director of the National Security Project for the American Civil Liberties Union, in a statement. “The government cannot shut down an entire communications platform unless it poses extremely serious and imminent harm, and there’s no evidence of that here.”

Lawmakers said the legislation was necessary to prevent China from using the app to obtain information on US citizens or spread propaganda. The US government didn’t offer evidence that China had used the app to influence US citizens or steal data as part of the case.

TikTok and a group of content creators claimed that the law tramples free-speech rights by silencing users, even while news outlets with foreign ownership continue to operate in the US.

But the panel of judges concluded that the law actually protects free speech because it restricts the Chinese government’s ability to manipulate public discourse on TikTok. “In this case, a foreign government threatens to distort free speech on an important medium of communication,” according to the opinion.

The court said that the US government’s national security concerns appeared to be justified given China’s history of spying, including attempts to gather sensitive data on US citizens. The Chinese government “poses a particularly significant hybrid commercial threat because it has adopted laws that enable it to access and use data held by Chinese companies,” wrote the panel.

The prospect of Americans being barred from using TikTok has sparked a backlash from users as well. Only 32% of US adults back the ban, according to a recent Pew survey.

Among those likely to benefit from a TikTok ban are Alphabet Inc.’s Google, Meta Platforms Inc. and Snap Inc., because they’re likely to see an increase in use of their own social-media platforms, according to Bloomberg Intelligence. Oracle Corp. could take a hit because it offers internet hosting services to TikTok.

The appellate panel that decided the case consisted of Chief Judge Sri Srinivasan, a Barack Obama appointee; Neomi Rao, who was appointed by Trump; and Ginsburg, a Ronald Reagan appointee.

The case is TikTok v. Garland, 24-1113, US Court of Appeals, District of Columbia Circuit (Washington).

–With assistance from Greg Stohr and Nancy Cook.

(Update with Justice Department statement.)

Most Read from Bloomberg Businessweek

©2024 Bloomberg L.P.