Court upholds law forcing TikTok U.S. sale

A federal appeals court has upheld legislation requiring Chinese-owned ByteDance to sell TikTok's US operations by January 19, 2024, or face a nationwide ban. The ruling, delivered on December 6, marks a significant victory for the Justice Department and TikTok opponents while dealing a severe blow to ByteDance.

The law affects approximately 170 million American TikTok users and is rooted in national security concerns about Chinese access to American user data. The court, comprising Judges Srinivasan, Rao, and Ginsburg, determined that the legislation was carefully crafted to address foreign adversary control and counter security threats posed by China.

TikTok plans to appeal to the Supreme Court, arguing the law violates First Amendment rights. The American Civil Liberties Union has criticized the decision, warning it sets a dangerous precedent for free speech. TikTok maintains it has never shared US user data with Chinese authorities and describes the concerns as speculative.

The ruling's implementation timeline places TikTok's fate initially in President Biden's hands, who can grant a 90-day extension, and subsequently with President-elect Trump, who takes office on January 20. Trump, who previously attempted to ban TikTok in 2020, has stated he would not support the ban this time.

The decision also upholds broader government powers to ban foreign-owned apps deemed concerning for Americans' data security. Following the ruling, shares of competing platforms Meta and Alphabet saw significant gains in the stock market.

ByteDance, valued at $268 billion in December 2023, faces the challenge of divesting TikTok's US assets or facing an unprecedented ban. The law would prohibit app stores from offering TikTok and prevent internet hosting services from supporting the platform unless ByteDance complies with the divestiture requirement.