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TikTok: Technology Overview and Issues Prohibiting Transactions with ByteDance The August 6, 2020, TikTok Executive Order was set to take effect on September 20, 2020, but that date has been extended to September 27, 2020. Once in effect, it will prohibit any U.S. company or person from transacting with ByteDance. The order does not state which specific transactions are to be prohibited, but it likely means, at least, the TikTok app will no longer appear on Apple’s App Store or Google’s Play Store in the United States. It might also make it illegal for U.S. companies to purchase advertising on TikTok. Some U.S. TikTok employees have speculated that they would no longer be able to be paid. Requiring Divestiture of ByteDance from TikTok On August 14, 2020, President Trump issued an additional Executive Order, “Regarding the Acquisition of Musical.ly by ByteDance Ltd.,”24 that imposed additional conditions on the ability of ByteDance to operate TikTok in the United States. The order requires ByteDance and its “subsidiaries, affiliates, and Chinese shareholders” to divest from “any tangible or intangible assets or property, wherever located, used to enable or support ByteDance’s operation of the TikTok application in the United States” as determined by the Committee on Foreign Investment in the United States (CFIUS).25 The order also requires ByteDance to destroy all data obtained or derived from either the TikTok or Music.ly apps from U.S. users upon divestiture and certify in writing to CFIUS that it has done so. The order requires these actions within 90 days, rather than the 45 days included in the first order, giving ByteDance additional time to find a buyer.26 A transfer of ownership and operation of TikTok to a U.S. entity not subject to Chinese laws, including management of collected user data, appears designed to limit the ability of the Chinese government to acquire access to future U.S. user data. ByteDance Lawsuit Against Order to Divest ByteDance opposed divestiture from TikTok and, on August 24, 2020, sued the Trump Administration.27 In a blog post, TikTok stated that it was “shocked by the recent Executive Order, which was issued without any due process.”28 On September 27, 2020, Judge Carl J. Nichols of the United States District Court for the District of Columbia granted a preliminary injunction against the Trump administration order. He stated that while President Trump has broad authority to prohibit business transactions with foreign entities that are deemed to pose a national security risk, TikTok appears to be exempt from such a prohibition because it is a personal communication service, which is protected by the International Emergency Economic 24 President Donald J. Trump, “Executive Order Regarding the Acquisition of Musical.ly by ByteDance Ltd.,” August 14, 2020, at https://home.treasury.gov/system/files/136/EO-on-TikTok-8-14-20.pdf. 25 CFIUS is an interagency committee that serves the President in overseeing the national security implications of foreign investment in the economy. For more information, see CRS In Focus IF10177, The Committee on Foreign Investment in the United States, by James K. Jackson. 26 Lora Kolodny, “Trump Orders Bytedance to Divest from Its U.S. Tiktok Business Within 90 Days,” CNBC.com, August 14, 2020, at https://www.cnbc.com/2020/08/14/president-trump-orders-bytedance-to-divest-from-its-us-tiktok- business-within-90-days.html. 27 Rachel Lerman, “TikTok Sues Trump Administration to Fight Impending Ban,” Washington Post, August 24, 2020, at https://www.washingtonpost.com/technology/2020/08/24/tiktok-lawsuit-trump. The lawsuit complaint is available online at https://assets.documentcloud.org/documents/7043165/TikTok-Trump-Complaint.pdf. 28 “Statement on the Administration’s Executive Order,” TikTok Blog, August 7, 2020, at https://newsroom.tiktok.com/ en-us/tiktok-responds. See also “Why We Are Suing the Administration,” TikTok Blog, August 24, 2020, at https://newsroom.tiktok.com/en-us/tiktok-files-lawsuit. Congressional Research Service 5PDF Image | TikTok: Technology Overview and Issues Updated October 21, 2020 Congressional Research Service
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