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Nine Things We Learned From TikTok’s Lawsuit Against The US Government
TikTok CEO Shou Zi Chew testifies before the House Energy and Commerce Committee, March 23, 2023.
AFP via Getty Images
Yesterday, as they promised they would, TikTok and ByteDance filed a lawsuit against the federal government challenging the constitutionality oft the Protecting Americans From Foreign Adversary Controlled Apps Act, known as PAFACA or just “The TikTok Ban Bill.”. The bill, which was passed by Congress and signed into law last month, requires ByteDance to sell TikTok’s U.S. operations by January 19, 2025 or face a ban of the app in the United States.
Most of the arguments in TikTok and ByteDance’s complaint are things that we’ve reported before — including details, acknowledged in the suit by the companies for the first time, but reported exclusively by Forbes last summer, of an ultimately unsuccessful negotiation with the interagency Committee on Foreign Investment in the United States. But here are nine things that were new or noteworthy, and suggest where this fight may be headed next.
1. RIP Project Texas?
In the complaint, TikTok and ByteDance now allege that they have “invested” more than $2 billion in Project Texas, the legal and technological framework that formed the basis of the companies’ proposal to CFIUS through years of national security negotiations. The ultimate goal of Project Texas was to divorce ownership from control, allowing ByteDance to own TikTok and its algorithm while legally and logistically preventing it from controlling the app’s U.S. operations. But CFIUS rejected Project Texas in March 2023, and the passage of PAFACA shows that Congress, too, thinks it’s not enough.
The $2 billion figure is new, up from a claim by TikTok in early 2023 that the company would spent $1.5 billion on the initiative. Tech companies have for years sought refuge from regulation by portraying themselves as engines of the U.S. economy, and part of TikTok/ByteDance’s strategy here is to project confidence and show that things are business as usual. But continuing to invest in a proposal that the U.S. government has repeatedly rejected may amount to throwing that money away, if the courts say the ban bill can stand.
2. Ghosted By The Government: When The Deal Really Went South
TikTok/ByteDance paint a dramatic picture of CFIUS ghosting them at the negotiating table between August 2022 and March 2023, when CFIUS said that ByteDance would have to sell TikTok or face a ban in the U.S.
“From Petitioners’ perspective, all indications were that they were nearing a final agreement,” the companies write. “After August 2022, however, CFIUS without explanation stopped engaging with Petitioners in meaningful discussions about the National Security Agreement. Petitioners repeatedly asked why discussions had ended and how they might be restarted, but they did not receive a substantive response.”
A lot happened in the months when CFIUS wasn’t talking to TikTok/ByteDance. It was during those months that Forbes revealed a plan by ByteDance’s Internal Audit and Risk Control department to surveil reporters in an effort to ferret out their sources, and ByteDance conducted an investigation showing that its employees had in fact surveilled journalists. ByteDance fired four employees as a result of what it subsequently referred to as “the misguided effort,” including its chief internal auditor and the Beijing-based executive that he reported to.
3. ByteDance’s Founder Lives In Singapore, Not China
The companies say that ByteDance founder Zhang Yiming, a Chinese citizen, is officially living in Singapore. Yiming, who prefers to go by his given name, has lived part-time on the island nation since 2022, where he rode out much of China’s most draconian COVID restrictions, but this is the first time the companies have described him as legally domiciled in a country other than China.
4. TikTok and ByteDance Finally Admit How Tightly They’re Wound Together
TikTok/ByteDance are now leaning into a thread that we’ve reported on for years: that the TikTok app is inextricably tied to the rest of ByteDance’s systems, in a way that makes separating them effectively impossible. “Moving all TikTok source code development from ByteDance to a new TikTok owner would be impossible as a technological matter,” the companies argue, before launching into an explanation about TikTok’s “millions of lines of software code that have been painstakingly developed by thousands of engineers over multiple years.”
It’s an ironic pivot away from a prior narrative in which TikTok and ByteDance insisted they were more separate than they really are. They have claimed time and again that US-based execs are running the show, despite extensive reporting showing that this isn’t and hasn’t ever fully been the case.
The companies also say that “to keep the platform running,” TikTok engineers “would need access to ByteDance software tools, which the Act prohibits.”
To be clear: TikTok’s reliance on other, non-TikTok ByteDance tools is one of the reasons lawmakers are worried about it! The companies’ new Project Texas entity, USDS, has reduced its dependency on ByteDance systems like Lark, the company’s all-in-one office suite, and Seal, its VPN. But their acknowledgement that TikTok still needs to run through ByteDance’s pipes eliminates any doubt that TikTok is still not just owned, but very much also controlled, by ByteDance today.
5. We Don’t Do Punishment By Legislation
PAFACA sets out conditions for how a president can designate an app as a “foreign adversary controlled application.” But it separately places TikTok — and all other ByteDance apps — in this category, without requiring the same presidential designation that is required for any other apps that might someday be covered by the law.
This structure is pretty weird! It likely came about because some lawmakers didn’t want to give the president discretion about whether to designate TikTok or not. By naming a specific app and its parent company in the bill, though, the lawmakers have opened themselves up to one of TikTok and ByteDance’s key claims: that the law is an unconstitutional Bill of Attainder — in layman’s terms, a law that seeks to punish a specific person or entity.
We don’t do punishment by legislation in the U.S.; we do it in the courts. So if TikTok can prove that the intent of this bill was to punish or ban it specifically, then the courts will likely find that the law can’t stand.
6. The Chinese Government Will Call The Shots On A Sale
TikTok and ByteDance flatly acknowledge in their complaint that the Chinese government would prohibit ByteDance from selling its famous recommendations algorithm. We’ve heard this from nearly every expert out there, but hearing it directly from TikTok/ByteDance makes clear that the Chinese government is the ultimate arbiter of who gets access to TikTok’s secret sauce.
7. Lawmakers Will Have To Eat Their Own Anti-TikTok Rants
We wrote a few weeks back about how lawmakers’ comments about the content on TikTok might come back to bite them in court, making it harder for the government to prove that it wasn’t acting out of hostility toward the substance of the conversation on the app. Our prophecy came true: TikTok/ByteDance argued exactly this point in their complaint.
8. About That Weird Product Review Carve Out
Lawmakers made a weird carve-out in their law for sites that host product reviews, travel reviews, and business reviews. TikTok and ByteDance say it’s unfair.
The bill is targeted at large platforms where users can create their own posts and view others’ posts — i.e. platforms that enable user-generated content, or UGC. Review apps are technically UGC apps, but they don’t have the same potential influence over discourse and culture as social apps do, so Congress exempted them from the law.
TikTok and ByteDance are now claiming that this exemption favors certain speech (reviews) over other speech (non-reviews). It seems unlikely that legislators were actually trying to privilege one topic of speech over the other, but that may not matter if the courts determine that the exemption effectively does so.
9. Everybody Has Been Gathering Evidence For This Showdown
Both TikTok/ByteDance and the government have spent years preparing for this moment — one where TikTok/ByteDance will argue that the ban bill is ill informed and overbroad and the government will ruefully shake its head and say, “we tried, but there was no other way.”
The First Amendment will govern most of the arguments raised by TikTok and ByteDance. But the First Amendment isn’t a blanket protection for all speech all the time. The parties will fight about which level of scrutiny applies in this case: whether the government will have to show that the law is substantially related to an important government interest (intermediate scrutiny) – or whether it will have to show that the law is narrowly tailored to achieve a compelling government interest (strict scrutiny). But that legalese is all just gradations of the same basic question: was this really necessary?
TikTok and ByteDance will pull out their last four years of communications with the government to claim that it wasn’t. They will say — they do say, in the complaint — that Project Texas would’ve worked. That a national data privacy law would’ve worked. That there were plenty of narrower things Congress could’ve done and didn’t do, things that were more targeted to their actual concerns. Because Congress didn’t do those things, TikTok and ByteDance say, they didn’t even try to take the narrowest path here.
But the government has almost certainly been amassing evidence too, even if we haven’t seen it yet. Back in 2020, TikTok and ByteDance defeated President Trump’s first attempt to ban the app in part by arguing that the whole thing was rushed. After that, the Biden Administration spent years in negotiations with the company, engaging with the inner workings of TikTok and ByteDance’s systems. Its agencies also spent many months examining the companies — the FBI and DOJ in a criminal investigation and the FTC in an investigation about the companies misleading users about who could access their data.
TikTok and ByteDance say that PAFACA was rushed just like the Trump ban attempt – from its conception largely in secret to the fact that it was quickly voted on and then appended to an omnibus foreign aid package, all before their lobbyists could get a word in edgewise.
Even if PAFACA was rushed, though, the larger government conversation about TikTok hasn’t been. Years of CFIUS negotiations and agency investigations — as well as classified intelligence — informed the closed-door briefings that members of the House and Senate received before voting on the bill. So we’ll be looking at years’ worth of evidence from both sides as the parties battle it out in Round 2.
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