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The justices are expected to rule quickly in the case.
When the Supreme Court hears arguments on Friday over whether protecting national security requires TikTok to be sold or closed, the justices will be working in the shadow of three First Amendment precedents, all influenced by the climate of their times and by how much the justices trusted the government.
During the Cold War and in the Vietnam era, the court refused to credit the government’s assertions that national security required limiting what newspapers could publish and what Americans could read. More recently, though, the court deferred to Congress’s judgment that combating terrorism justified making some kinds of speech a crime.
The court will most likely act quickly, as TikTok faces a Jan. 19 deadline under a law enacted in April by bipartisan majorities. The law’s sponsors said the app’s parent company, ByteDance, is controlled by China and could use it to harvest Americans’ private data and to spread covert disinformation.
The court’s decision will determine the fate of a powerful and pervasive cultural phenomenon that uses a sophisticated algorithm to feed a personalized array of short videos to its 170 million users in the United States. For many of them, and particularly younger ones, TikTok has become a leading source of information and entertainment.
As in earlier cases pitting national security against free speech, the core question for the justices is whether the government’s judgments about the threat TikTok is said to pose are sufficient to overcome the nation’s commitment to free speech.
Senator Mitch McConnell, Republican of Kentucky, told the justices that he “is second to none in his appreciation and protection of the First Amendment’s right to free speech.” But he urged them to uphold the law.
“The right to free speech enshrined in the First Amendment does not apply to a corporate agent of the Chinese Communist Party,” Mr. McConnell wrote.
Jameel Jaffer, the executive director of the Knight First Amendment Institute at Columbia University, said that stance reflected a fundamental misunderstanding.
“It is not the government’s role to tell us which ideas are worth listening to,” he said. “It’s not the government’s role to cleanse the marketplace of ideas or information that the government disagrees with.”
The Supreme Court’s last major decision in a clash between national security and free speech was in 2010, in Holder v. Humanitarian Law Project. It concerned a law that made it a crime to provide even benign assistance in the form of speech to groups said to engage in terrorism.
One plaintiff, for instance, said he wanted to help the Kurdistan Workers’ Party find peaceful ways to protect the rights of Kurds in Turkey and to bring their claims to the attention of international bodies.
When the case was argued, Elena Kagan, then the U.S. solicitor general, said courts should defer to the government’s assessments of national security threats.
“The ability of Congress and of the executive branch to regulate the relationships between Americans and foreign governments or foreign organizations has long been acknowledged by this court,” she said. (She joined the court six months later.)
The court ruled for the government by a 6-to-3 vote, accepting its expertise even after ruling that the law was subject to strict scrutiny, the most demanding form of judicial review.
“The government, when seeking to prevent imminent harms in the context of international affairs and national security, is not required to conclusively link all the pieces in the puzzle before we grant weight to its empirical conclusions,” Chief Justice John G. Roberts Jr. wrote for the majority.
In its Supreme Court briefs defending the law banning TikTok, the Biden administration repeatedly cited the 2010 decision.
“Congress and the executive branch determined that ByteDance’s ownership and control of TikTok pose an unacceptable threat to national security because that relationship could permit a foreign adversary government to collect intelligence on and manipulate the content received by TikTok’s American users,” Elizabeth B. Prelogar, the U.S. solicitor general, wrote, “even if those harms had not yet materialized.”
Many federal laws, she added, limit foreign ownership of companies in sensitive fields, including broadcasting, banking, nuclear facilities, undersea cables, air carriers, dams and reservoirs.
While the court led by Chief Justice Roberts was willing to defer to the government, earlier courts were more skeptical. In 1965, during the Cold War, the court struck down a law requiring people who wanted to receive foreign mail that the government said was “communist political propaganda” to say so in writing.
That decision, Lamont v. Postmaster General, had several distinctive features. It was unanimous. It was the first time the court had ever held a federal law unconstitutional under the First Amendment’s free expression clauses.
It was the first Supreme Court opinion to feature the phrase “the marketplace of ideas.” And it was the first Supreme Court decision to recognize a constitutional right to receive information.
That last idea figures in the TikTok case. “When controversies have arisen,” a brief for users of the app said, “the court has protected Americans’ right to hear foreign-influenced ideas, allowing Congress at most to require labeling of the ideas’ origin.”
Indeed, a supporting brief from the Knight First Amendment Institute said, the law banning TikTok is far more aggressive than the one limiting access to communist propaganda. “While the law in Lamont burdened Americans’ access to specific speech from abroad,” the brief said, “the act prohibits it entirely.”
Zephyr Teachout, a law professor at Fordham, said that was the wrong analysis. “Imposing foreign ownership restrictions on communications platforms is several steps removed from free speech concerns,” she wrote in a brief supporting the government, “because the regulations are wholly concerned with the firms’ ownership, not the firms’ conduct, technology or content.”
Six years after the case on mailed propaganda, the Supreme Court again rejected the invocation of national security to justify limiting speech, ruling that the Nixon administration could not stop The New York Times and The Washington Post from publishing the Pentagon Papers, a secret history of the Vietnam War. The court did so in the face of government warnings that publishing would imperil intelligence agents and peace talks.
“The word ‘security’ is a broad, vague generality whose contours should not be invoked to abrogate the fundamental law embodied in the First Amendment,” Justice Hugo Black wrote in a concurring opinion.
The American Civil Liberties Union told the justices that the law banning TikTok “is even more sweeping” than the prior restraint sought by the government in the Pentagon Papers case.
“The government has not merely forbidden particular communications or speakers on TikTok based on their content; it has banned an entire platform,” the brief said. “It is as though, in Pentagon Papers, the lower court had shut down The New York Times entirely.”
Mr. Jaffer of the Knight Institute said the key precedents point in differing directions.
“People say, well, the court routinely defers to the government in national security cases, and there is obviously some truth to that,” he said. “But in the sphere of First Amendment rights, the record is a lot more complicated.”
Anthropic is teaming up with several large investment firms to create a venture that will help companies integrate artificial intelligence tools into their systems, the latest example of the deepening ties between Wall Street and the A.I. industry.
The private equity firms Blackstone and Hellman & Friedman and the investment bank Goldman Sachs through its investment funds are among the financial backers in the new firm, which will work with companies to deploy Anthropic’s A.I. model Claude.
In announcing the creation of the firm on Monday, Anthropic and the investment firms said the technology around A.I. was changing so rapidly that many companies were finding it challenging to integrate Claude.
The backers of the new firm said it would work with Anthropic’s engineers to help companies deploy Claude, which has abilities that “change on a monthly or even weekly basis.”
The creation of a firm combining Wall Street and Anthropic comes as the A.I. industry is locked in a fierce competition to become the go-to A.I. model in the private and public sector. It is also happening as A.I. companies, including Anthropic and its rival OpenAI, are expected to soon go public in what could be the largest series of public stock offerings ever, creating a boon for Wall Street.
The decision by Blackstone, Goldman and the other investment firms to partner with Anthropic is a notable endorsement of an A.I. company that the Trump administration has criticized for refusing to allow the Pentagon to deploy its models without meeting the company’s ethical limits.
Anthropic and the Pentagon are in federal litigation over the Defense Department’s decision to label the company a supply chain risk, an unusual use of the government’s power to raise concerns about how corporations build their products.
Many of the details of Anthropic’s venture with Wall Street have not yet been announced, including its name and chief executive. But one area that the venture said it would start working on is integrating Claude at portfolio companies of the private equity firms that backed this deal, including Blackstone and Hellman & Friedman.
Anthropic, Blackstone and Hellman & Friedman said they would each put $300 million into the new company, and Goldman Sachs would contribute roughly $150 million, according to two people familiar with the deal terms. General Atlantic, Leonard Green, Apollo Global Management, GIC and Sequoia Capital are among the other firms that are taking part and investing in the venture.
Wall Street banks have been among A.I.’s enthusiastic corporate users. During the first quarter earnings reports from the largest banks, some executives discussed with unusual candor how A.I. had automated certain jobs, which in turn led to job cuts and higher profits.
Elon Musk recently demanded that banks, law firms, auditors and other advisers working on the I.P.O. of his company, SpaceX, to buy subscriptions to his A.I. chatbot, Grok.
Business
Regulators may seek to suspend State Farm’s license, citing widespread mishandling of L.A. wildfire claims
California regulators may seek to suspend State Farm’s license for up to a year and levy millions in penalties against the insurer, alleging it mishandled January 2025 wildfire claims in Los Angeles County.
In an extraordinary step, the Department of Insurance announced Monday that it filed an administrative action against the state’s largest home insurer after an investigation into 220 sample claims found 398 violations of state law in about half of them.
“Our investigation found that State Farm delayed, underpaid, and buried policyholders in red tape at the worst moment of their lives,” Insurance Commissioner Ricardo Lara said in a statement. “That is unacceptable, and we are taking decisive action to hold them accountable.”
The department is seeking a cease-and-desist order to stop the insurer from engaging in unfair or deceptive practices — and to possibly suspend State Farm’s “certificate of authority” for up to a year, meaning it could not write policies during that period, department spokesperson Michael Soller said.
While the terms of the proposed suspension aren’t clear, the move could prevent the insurer — which covers more than 1 million homes — from issuing new policies at a time when the state is facing an insurance crisis.
The case will be heard by a state administrative law judge, who will provide a recommendation to Lara on a possible monetary penalty and whether to carry out the license suspension. State regulators declined to comment on the action or how it might affect policyholders.
State Farm on Monday rejected the department’s claims that it engaged in a “general practice of mishandling or intentionally underpaying wildfire claims” and said it will further respond through the legal process.
“California’s homeowners insurance market is the most dysfunctional in the country,” State Farm said in a statement. “The California Department of Insurance should take responsibility for regulatory delays and uncertainty that have contributed to fewer choices and higher costs for consumers.”
State Farm said it has paid more than $5.7 billion and handled more than 11,700 residential and auto claims. That is nearly one-third of those filed after the Jan. 7, 2025, fires that damaged or destroyed more than 18,000 structures and killed 31 people.
The department in June 2025 launched a “market conduct exam” into State Farm General — the subsidiary of the giant Bloomington, Ill., insurer that handles California home insurance — after complaints by victims of the fires in Pacific Palisades, Altadena and nearby communities.
The Times reported that within two months of the fires homeowners were getting frustrated with the insurer over its handling of smoke damage claims. They contended that State Farm was resisting hygienic testing for toxic chemicals and was trying to minimize cleanup costs, which the company denied.
Later, anger was directed at Lara, with fire victims saying he wasn’t cracking down on State Farm. More than a dozen homeowners told The Times this year that the department did little to resolve a wide range of complaints they filed against State Farm.
Los Angeles County also has an ongoing investigation into the insurer.
Nevertheless, the threat to suspend State Farm’s license because of the alleged violations was met with skepticism. The company has a roughly 20% market share. It’s unclear where its policyholders could find coverage.
State Farm’s decision to not renew some 72,000 residential policies in March 2024 because of its losses after a series of wildfires sparked fears that California’s home insurance market could be on the brink of collapse.
“Given how the department has bent over backward to prevent State Farm from carrying out its threats to leave the state due to its alleged financial problems, it’s hard to believe,” said Carmen Balber, executive director of Los Angeles advocacy group Consumer Watchdog.
Soller said the terms of a possible suspension — including whether it would apply only to new policies or existing policyholders — would be set after the hearing.
“Any order must define the terms of a suspension based on the evidence at a hearing. We cannot predict what an order after a hearing on the evidence will be,” he said.
The results of the market conduct exam were released Monday in support of the legal action.
It found that the company failed in numerous cases to pursue a “thorough, fair and objective investigation” into claims, failed to come to “prompt, fair, and equitable settlements” and made settlement offers that were “unreasonably low.”
Other alleged violations included a failure to give timely responses to claims, provide a factual or legal basis for claim denials and give victims a primary point of contact after assigning three or more adjusters in a six-month period.
The legal filing also faults the company’s handling of smoke damage claims, including denials of payments for hygienic testing.
The company denied it was at fault in some cases and admitted it was at fault in others, often saying that the problem was due to issues with specific adjusters, and that it held meetings with adjusters after hearing about the alleged violations.
State Farm said Monday that the “additional payments tied to the issues identified in the Market Conduct Examination were about $40,000 in the context of more than $5.7 billion paid.”
The alleged violations each carry a fine of up to $5,000 in general and up to $10,000 if they are found to be willful.
The department said the alleged violations could bring penalties of $2 million or more. Soller said regulators also want State Farm to make policyholders whole, but does not have authority to order restitution
Soller noted that is why the department is sponsoring a bill by state Senate Insurance Committee Chair Steve Padilla (D-Chula Vista) that would require insurers to pay restitution directly to policyholders.
State Farm released a statement April 22 that outlined five “commitments” to policyholders.
They included providing single points of contact and improved communication so there are “fewer handoffs, fewer repeated explanations, and seamless support.”
Fire victims have long called for a crackdown on the insurer and to bar a rate increase State Farm was seeking until it resolved their complaints. They also called for Lara’s resignation, claiming he was not enforcing the law, while he contended the market conduct exam needed to take its course.
The company was ultimately granted a 17% rate hike in March after a three-way agreement that also involved Consumer Watchdog, which had intervened in the matter as allowed under state law.
Joy Chen, executive director of Every Fire Survivor’s Network, a community group that led the calls to stop the rate hike and for Lara’s resignation, said the insurer must make harmed policyholders whole.
“We call on the department to act on every outstanding complaint, and report transparently on outcomes. State Farm’s parent sits on $240 billion in assets. They have the money to fulfill their obligations to L.A. fire survivors,” Chen said.
Possible sanctions against State Farm are a “positive development” but mean little in practice for Pacific Palisades property owner John Hurley, who continues to fight the insurer to mediate asbestos and heavy metal contamination from the fire nearly 16 months ago.
He said State Farm stopped reimbursing him for lost rent on the unrepaired house. Hurley has filed at least half a dozen complaints with the state insurance department, to little avail.
“I unfortunately feel the insurance companies and the state are somewhat allies,” Hurley said. Even if the state agency were to prevail in sanctions against State Farm, “who gets the money? The state … or the insured?”
Times staff writer Paige St. John contributed to this report.
A few months ago, Matt Bedsole got a call from two real estate developers asking for his help. Their plan to build a four-story apartment complex in Chattanooga, Tenn., had a financial hole that no backer seemed eager to fill. The developers needed $8 million. Would Mr. Bedsole be interested in stepping in?
Mr. Bedsole is not a normal investor. He is the chief executive of Invest Chattanooga, a fund set up by the city of 200,000 to invest in local apartment projects. Unlike private equity firms — the main backers of new construction — he judges deals not solely on their financial return, but on how much housing they can deliver the city.
The apartment complex cleared that hurdle. It called for 170 new units that would replace a self-storage center ringed by barbed wire, in a gentrifying part of the city. But Mr. Bedsole had terms. In exchange for the $8 million investment, he got a 51 percent stake in the building and an agreement that 30 percent of its units be priced below market rate. The developers said yes. They closed the deal over pastrami sandwiches.
“Money is tight and developers don’t have a ton of options for capital right now,” Mr. Bedsole said in an interview. “We have it, but we want affordable units in the deal.”
Invest Chattanooga is part of a new class of government-backed funds that invest directly in new housing. The aim is to speed up construction and create housing that is permanently affordable and controlled locally. In the process they are rewriting how local housing programs have traditionally operated.
Each effort is a little different, but the guiding principle is to get developers to build more housing, with lower rents, in exchange for public investment. Instead of asking a high rate of return, as a private investor would, these funds require less money back from developers but stipulate that a portion of the units carry below market-rate rents.
They come at a time when a mix of higher interest rates and rising costs for insurance and materials like lumber have caused investors to run from new construction. Economists estimate the nation needs about 2 million new housing units, yet the pace of home building slowed last year.
Some states, like Hawaii, have created funds that lend money to developers on more favorable terms than Wall Street or a bank would, while others, including New York, have created funds to accelerate stalled projects. Atlanta aims to use public land to stimulate new home building: The city’s Urban Development Corporation contributes city-owned land to private development projects and keeps a stake after the building is completed.
Then there are public investment funds like the one in Chattanooga.
There are about two dozen of these funds in the United States, said Shaun Donovan, the chief executive of Enterprise Community Partners, which recently created a team to help them and is trying to set up its own fund to augment their efforts. The funds provide “capital, but capital at this moment of maximum impact, which is getting the building out of the ground,” said Mr. Donovan, who served as the housing secretary in the Obama administration.
Most of these efforts were inspired by Montgomery County, Md., whose Housing Opportunity Commission has for decades been a kind of national laboratory for affordable housing innovation. Mr. Bedsole has been something of a human catalyst in this process: He helped create Atlanta’s system based on the Montgomery County model, then took these ideas to Chattanooga last year.
“The cavalry isn’t coming, so we have to figure this out on our own,” said Tim Kelly, Chattanooga’s mayor.
From Public Housing to Patchwork
Figuring out how to produce low-cost housing for people who cannot afford market rents is a riddle that has vexed cities throughout the modern era. Governments have spent much of the past century veering between public and private sector solutions. Today most new affordable housing is delivered by a hybrid system, in which public subsidies finance private development.
That system is a product of shifting politics more than considered policy design. Starting in the 1970s, the federal government essentially stopped building public housing as part of a broader shift away from welfare benefits. What replaced it was a patchwork of rental vouchers and tax benefits — the biggest of which, the Low-Income Housing Tax Credit (LIHTC), was created in 1986 — for companies that provide affordable housing. Local governments now depend on that credit to build everything from low-cost apartments for teachers to supportive housing for people leaving homeless shelters.
One of the problems with low-income tax credits is that they are complicated to use and expire over time, often between 15 and 30 years, at which point the building’s owner can start charging market rents. It’s a galling turn for cities, since they often give millions in grants to finance affordable projects. To prevent building owners from evicting low-income tenants after the affordability restrictions lapse, many governments end up buying buildings back.
“So now the state has paid for the building twice — initially with subsidies, and then by giving a wad of cash to the developer,” said Stanley Chang, a state senator in Hawaii. “That is obscene.”
A Small Chip at a Growing Problem
Mr. Kelly, the mayor of Chattanooga, said he created Invest Chattanooga to prevent that obscenity. A businessman who ran car dealerships and co-founded the local soccer club, he was elected in 2021 (and re-elected last year) on an affordable housing platform.
At first, Chattanooga responded to its housing crisis by overhauling its zoning laws to allow more density, and legalizing backyard units on residential lots. This was the formula followed by many state and local governments over the past decade as rent and house prices have ballooned. But, as in many cities, the construction that followed leaned heavily toward higher-end buildings, where rents are too expensive for large swaths of the work force.
According to a city report, over the past five years Chattanooga has lost about half of its apartments that rent for less than $1,000 a month. The new apartments rent for too much, while federal programs do not produce enough units to meet the need.
But there are two ingredients in construction: land and money. So Chattanooga decided to focus on the second of these and became an investor, putting up $20 million to create Invest Chattanooga and hiring Mr. Bedsole from Atlanta to run it.
Invest Chattanooga is run like a business that makes money, then turns profits into cheaper housing. It puts up the initial cash, usually a mix of equity and debt financing, that developers need to get a bank loan. In exchange for the money, projects built with the fund must have at least 30 percent of their units reserved for families making below the median income in the area.
The city gets a return but it’s low — about 8 percent on the recent deal to replace the storage center, versus private equity firms that in many cases ask for double that amount. That difference can mean a developer saves several million dollars on a multiunit building, making it possible to lower the rent. And unlike units built with federal tax credits, Invest Chattanooga owns the building so can capture the upside of higher land values down the line.
Mr. Bedsole said Invest Chattanooga has a relatively modest goal of producing 100 affordable units a year by 2030, and to raise an additional $20 million for more projects. It is one little chip in a problem that gets bigger every day. Unlike the public housing agencies of old, his agency is not replacing developers in the process of building housing. Rather, it is trying to replace the financiers who decide what does and does not get built.
“I’m not competing with developers,” Mr. Bedsole said. “I’m competing with private equity.”
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