The speculation on TikTok’s U.S. ban came to an end as President Donald Trump signed an executive order on August 6. The order will take effect 45 days from the date of release, after which U.S. companies cannot engage in any transactions with TikTok’s parent company, ByteDance Ltd.
In the document, President Trump names the International Emergency Economic Powers Act and the National Emergencies Act as authority for the move. The executive order cites a “national emergency with respect to the information and communication technology supply chain.”
— Andrew Feinberg (@AndrewFeinberg) August 7, 2020
In short, TikTok will have to drop its services in the U.S. come September 20. In the wake of the executive order, TikTok has started preparing legal actions against the U.S. Administration. Sources have told NPR that the company is looking to file a suit in the U.S. District Court for the Southern District of California.
The legal action will challenge the executive order based on the fact that there was no chance given to TikTok to respond and that there is no proof nor steps taken to assert that the app represents a threat to U.S. national security.
As reported to NPR, TikTok could file legal action as soon as Tuesday. In the meantime, TikTok has already addressed the Administration’s Executive Order with a statement. There, TikTok reaffirms that they have “never shared user data with the Chinese government, nor censored content at its request.”
Additionally, TikTok has also asked their “100 million American” users to bear with them. They have also encouraged their U.S. users to express opinions to “elected representatives, including the White House.”
Does this affect the option of selling TikTok’s U.S. operations?
Apart from pursuing legal actions, ByteDance is also considering selling its U.S. operations. Doing so would remove any threat from the Trump Administration, who also favor that a U.S. company buy off TikTok. President Trump has already suggested that there be ‘economic benefit’ to the U.S. Treasury as a part of this deal.
Microsft CEO, Satya Nadella, has already contacted President Trump about the purchase of TikTok. Through a statement, Microsoft confirms that they have already notified the CFIUS (Committee on Foreign Investment in the United States) regarding the discussions with ByteDance.
According to the statement, Microsoft has sent a preliminary proposal that involves purchasing TikTok’s services in the United States, Canada, Australia, and New Zealand and owning and operating TikTok in these markets.
Microsoft has taken a deadline for completing the discussions “no later than September 15, 2020.” They have also stated that “these discussions are preliminary and there can be no assurance that a transaction which involves Microsoft will proceed.”
While Microsoft has publicly acknowledged their intentions about TikTok, a report from the Wall Street Journal puts another company in the picture.
According to WSJ, Twitter has also had a preliminary discussion with TikTok. Given the financial position of Twitter as compared to Microsoft, an acquisition would be hard to pull off for Twitter. Hence, it looks like Twitter is opting for a “combination” of some sort with TikTok.
In any case, a deal with either Microsoft or Twitter would have to involve TikTok’s U.S. operations given the executive order.