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TikTok seeks injunction to put app ban on hold while Oracle deal is scrutinised

By | Published on Thursday 24 September 2020


TikTok has asked a federal judge in the US to issue a preliminary injunction that would stop Donald Trump’s big ban of the video-sharing app from coming into force this weekend. The legal filing was made as negotiations continue with governments in Washington and Beijing over a deal that would restructure the global TikTok business.

Trump, of course, issued an executive order last month banning Americans from transacting with TikTok and its China-based parent company Bytedance, based on concerns that the Chinese government has access to TikTok’s global audience and userbase. That ban was meant to come into force last weekend, but was postponed for a week after Bytedance sent in its plans for the aforementioned restructuring of the TikTok business.

Under those plans, there would be a new TikTok Global company which would be 20% owned by American firms, including technology outfit Oracle and supermarket giant Walmart. That company would subsequently IPO on a US stock exchange. Meanwhile, Oracle would become TikTok’s global technology partner, taking responsibility for ensuring that the Chinese authorities can’t access data relating to American users.

Although Trump last weekend said those plans had his “blessing”, there remains some confusion over the specifics of the Oracle deal and some of the accompanying sweeteners, such as TikTok financing a new educational programme.

And, earlier this week, Trump said that the deal would only be formally approved if Oracle and other American investors were in total control of TikTok. Which they won’t be, really, under the current deal. Although, because Bytedance itself is 40% owned by American investors, technically TikTok Global will be more than 50% owned by non-Chinese entities.

Anyway, all these shenanigans – not to mention rumours that the Chinese government could as yet also seek to block the proposed deal – mean the precise future of TikTok in the US is still unclear, and that big ban is still – as of yet – due to kick in this weekend.

Concurrent to all that, Bytedance has gone to court seeking to overturn Trump’s executive order, arguing that it is an overreach of his legal powers and unconstitutional. It’s with those arguments that the company’s lawyers are now seeking a preliminary injunction, putting any ban on hold pending the ongoing talks around the Oracle deal and Bytedance’s legal action against Trump.

In a legal filing yesterday formally requesting the injunction, Bytedance and TikTok said they had “made extraordinary efforts to try to satisfy the [US] government’s ever-shifting demands and purported national security concerns, including through changes in the ownership and structure of their business, and they are continuing to do so”.

Meanwhile, they alleged that Trump’s big TikTok ban wasn’t even really “motivated by a genuine national security concern”, but instead was the result of “political considerations relating to the upcoming general election”.

Bytedance’s lawyers are presumably hoping that the US courts will intervene on the TikTok ban in the same way they did last weekend on another of Trump’s executive orders targeting a Chinese business, that being Tencent-owned messaging app WeChat.

The injunction temporarily putting the WeChat ban on hold was secured via legal action pursued by a group of WeChat users who argued that the ban would infringe on their First Amendment free speech rights.

We await to see how the court responds to TikTok’s injunction request, while also continuing to closely follow all the chatter and confusion around the big old Oracle deal. Good times.