TikTok parent company ByteDance filed suit against President Trump and the U.S. Department of Commerce Wednesday, requesting that the court allow the popular social short-form video sharing app to continue operating in U.S. app stores as it works to finalize a merger with an American company.
President Trump previously gave TikTok a deadline of Sept. 27 to finalize and gain government approval of a sale of its U.S. assets to an American-owned company, after voicing concerns that the app, which is owned by Chinese tech firm ByteDance, was misusing user information and jeopardizing national security. If a sale isn’t approved by that date, Trump said, he’ll ban new downloads of the app in U.S. app stores.
A deal between Oracle and Walmart to jointly buy a stake in the company and create a new entity to manage it, called Tiktok Global, seemed to have the President’s approval on Sept. 19, but just two days later Trump went on Fox News and said that he wouldn’t green-light any deal that would leave any control of TikTok Global in the hands of China-based ByteDance.
“[ByteDance] will have nothing to do with it, and if they do, we just won’t make the deal,” the President said during his Fox News appearance.
A deal to buy TikTok’s U.S. operations still is not finalized. TheWrap’s tech reporter Sean Burch noted in a report last week that even if the Oracle and Walmart deal were approved by the U.S. Government, it would still leave 80% of the app’s ownership in Chinese hands, a far cry from the “America first” deal Trump claims he’s brokering.
In its filing Wednesday, TikTok and its interim Chief Executive Vanessa Pappas argued that taking its app off Apple’s App Store and Google Play would cause “devastating and irreparable harm” to the company and could “decimate the app’s user base.”
Throughout a 50-page memorandum attached to the lawsuit, TikTok made its case for continued U.S. operations and said a ban on its business could also jeopardize its advertising business. Though TikTok videos aren’t directly monetized, like YouTube content is, the company still gains revenue from ad dollars in the form of sponsorships and branded content.
“Even if the ban is lifted after a period of weeks or months, the harm to TikTok’s user base and competitive position will be permanent,” TikTok’s legal counsel argued. “Competitors are already taking, and will continue to take, advantage of this impending shutdown to entice TikTok creators and users to switch platforms.”
TikTok isn’t wrong to be worried about competition from other apps — in early August, mobile app analysis firm SensorTower found that TikTok alternatives, including app like Byte, Dubsmash, Triller and Zynn, grew installs by a combined 361% since July 27 when President Trump first made mention of banning the app.