For a company facing a legal death sentence, TikTok sure isn’t acting like it plans to go down anytime soon. Either that, or its hedging its bets.
This week, the ByteDance-owned social media platform, along with eight named users, filed their expected formal lawsuit against the U.S. government challenging the law passed by Congress and signed by President Biden earlier this year requiring TikTok to be sold to a non-Chinese owned company by January 19, 2025 or face permanent banishment from the United States.
The brief filed in the U.S. Court of Appeals for the District of Columbia Circuit largely rehashes arguments TikTok made in its initial petition for review filed last month, principally that the forced sale or ban violates the company’s and its users’ First Amendment rights, and the Constitution’s ban on bills of attainder. But this time, it adds as an exhibit a nearly 100-page draft agreement TikTok offered the government in 2022 in a bid to address the government’s purported national security concerns, which the Biden Administration rejected.
The exhibit is intended to demonstrate the government’s bad faith and alleged punitive intent in targeting TikTok to the exclusion of other foreign-owned apps. But its inclusion is also likely an attempt to maneuver around the provision in the law establishing the DC Circuit as the exclusive forum for judicial review of the act. The provisions is ostensibly meant to allow for expedited constitutional review, including by the Supreme Court, before the law’s date of execution. But it has the effect of denying TikTok access to the discovery process and trial record normally developed at the district court level.
Oral arguments at the DC Circuit are set for mid-September.
Meanwhile, TikTok continues to act and operate as if nothing has happened, or is likely to happen, to disrupt its plans to build on its position as an important promotional outlet for music artists (and fans) to become a major player in the music business as well. According to a report this week in Music Business Worldwide, TikTok has begun a search for executives from the investment banking or private equity worlds to lead a new investment team focused on “partnership or acquisition opportunities in the music content space on a global level.”
In other words, it plans to enter the highly competitive M&A market for music rights and royalty-based assets.
The company also recently settled its beef with Universal Music Group, allowing for the return of UMG artists’ music to the platform, launched the music distribution service for artists, SoundOn, and continued its recruiting efforts for A&R executives with record label experience.
You wouldn’t be entering into long-term agreements, hiring senior executives or expanding your investment portfolio if you thought there was a better-than-even chance you’d be gone in six months. Clearly, TikTok does not believe that will be the case. Nor, presumably, do its counterparties and recruits, or they wouldn’t be making the deals.
We won’t for certain until January (and who knows what this Supreme Court could do?). It’s also possible (if terrifying) that Donald Trump could be back in the White House come January. He recently, without much explanation, switched his position on TikTok after trying to ban it in his first terms. So it’s possible he could try to lift the ban if it takes effect.
For all the drama around forced sale or ban, no one seems to be treating it as settled law.