TikTok is planning to challenge President Donald Trump’s executive order to ban transactions with the popular short-video app and its Chinese parent ByteDance as early as Monday, according to people familiar with the details.
On August 14, Trump released an executive order granting ByteDance 90 days to divest TikTok’s US operations. ByteDance has made progress in negotiations with potential acquirers, including Microsoft and Oracle. Some of the US investors from ByteDance could join the winning bid too.
The legal threat from TikTok involves an earlier executive order signed by Trump on August 6, the sources said.The order mandated the country’s Secretary of Trade to draw up a list of transactions involving ByteDance and its assets which should be banned after 45 days.
According to the sources, TikTok aims to claim that the executive order of August 6 deprives it of a fair treatment. It will also challenge its classification as a threat to national security by the White House.
There is uncertainty as to which court TikTok would approach to file the case. Previously, the company had said it was reviewing its legal options and its employees were also organizing their own lawsuit.
While TikTok is best known for its videos of teenagers dancing and going viral, US officials have expressed concerns that user information could be passed on to the communist government of China.
The legal challenge from TikTok will not protect ByteDance from having to divest the app. This is because it does not apply to the August 14 order regarding the TikTok sale, which is not subject to judicial review.
The step, however, shows ByteDance’s attempt to deploy all the legalities available as it tries to prevent the TikTok deal from turning into a loss sale.
The Trump administration has stepped up their efforts to remove what it calls “untrusted” Chinese software from the digital networks of the country. In addition to TikTok, Trump has also released an order prohibiting transactions with multipurpose Chinese app, WeChat.
Trump said he would support Microsoft’s plan to purchase American operations of TikTok only if the US government received a “substantial portion” of the proceeds, but he also said there are other interested potential buyers including Oracle.