U.S. Appeals Court Upholds TikTok Divestment Law

WASHINGTON (Reuters) – A U.S. federal appeals court on Friday upheld a law requiring Chinese-based ByteDance to divest its popular short video app TikTok in the United States by early next year or face a ban.

The ruling could be appealed to the Supreme Court or a full appeals court panel.

U.S. appeals court Judges Sri Srinivasan, Neomi Rao, and Douglas Ginsburg considered legal challenges brought by TikTok and its users against the law that gives ByteDance until January 19 to sell or divest TikTok's U.S. assets or face a ban.

The appeals court stated that the law "was the culmination of extensive, bipartisan action by Congress and by successive presidents. It was carefully crafted to deal only with control by a foreign adversary, and it was part of a broader effort to counter a well-substantiated national security threat posed by the PRC (People's Republic of China)."

President Joe Biden, who signed the law in April, can grant a one-time extension of up to 90 days, but only if ByteDance has made significant progress in finding a buyer.

The court noted its decision would lead to TikTok's ban on January 19 without an extension from Biden.

"Consequently, TikTok’s millions of users will need to find alternative media of communication," the court said, highlighting China's "hybrid commercial threat to U.S. national security, not to the U.S. Government, which engaged with TikTok through a multi-year process in an effort to find an alternative solution."

The Justice Department has asserted that under Chinese ownership, TikTok poses a serious national security threat because of its access to vast amounts of personal data from Americans, claiming that China could covertly manipulate the information Americans consume via TikTok.

TikTok and ByteDance argue the law is unconstitutional and violates Americans' free speech rights, describing it as "a radical departure from this country's tradition of championing an open Internet."

President-elect Donald Trump, who unsuccessfully attempted to ban TikTok during his first term in 2020, stated before the November elections that he would not support a ban on TikTok, used by 170 million Americans.

The law prohibits app stores like Apple and Alphabet's Google from offering TikTok and bars internet hosting services from supporting TikTok unless ByteDance divests TikTok by the deadline.

U.S. officials have warned that TikTok's management is beholden to the Chinese government, which could compel the company to share user data.

TikTok has denied it has or ever would share U.S. user data, claiming that American lawmakers in the lawsuit are advancing "speculative" concerns.