TikTok: Has Time Run Out?
Further to our previous post.
President Biden has now signed off on the Protecting Americans From Foreign Adversary Controlled Applications Act, which effectively criminalizes the distribution, maintenance or updating of a foreign adversary controlled application in the US. According to The Hill, the now mandated sale of the company is “poised to be one of the most significant and contentious technology transactions in recent years”. Analysts estimate that the U.S. operations of TikTok could demand a price in the tens of billions of dollars.
TikTok essentially has two options. First, it could comply with the law and sell to a non-Chinese owner within the next 9 months. This avenue poses serious challenges. Not only may ByteDance Ltd. refuse to sell the app, the Chinese government has said that it would not approve a sale of the algorithm (signalling that Beijing’s priority is not the company’s financial prosperity or global expansion). Furthermore, antitrust scrutiny may take many of the American tech giants (such as Google and Meta, formerly Facebook) out of the buyers race. If TikTok fails to sell within the stipulated timeframe, then app stores will be forced to ban the app in the U.S.
Second, TikTok could file a lawsuit challenging the legislation. TikTok has vowed to sue and will likely seek a preliminary injunction from the court. Following the enactment of the bill, TikTok CEO, Shou Chew, called it “a ban on TikTok and a ban on you and your voice”. The case is therefore expected to focus on alleged violations of the company’s First Amendment rights and those of its 170 million users.
TikTok’s legal challenge will not be met without a fight. The government is likely to respond with national security claims, similar to those cited as the legislation progressed through Congress.
While the question of TikTok’s longevity in the Western world is uncertain, its CEO remains confident. Chew publicly assured its user base that they “aren’t going anywhere”, that “the facts and the Constitution are on [their] side,” and they “expect to prevail again”. Time will tell.
Author: Emily Groper, 2023/2024 Articling Student-At-Law
Expertise
Insights
-
Technology
Archer Aviation Signs MoU with Southwest Airlines
On Friday, July 12, American aviation giant Southwest Airlines and start-up Archer Aviation announced that they had signed a memorandum of understanding, which will allow Archer to tap Southwest’s… -
Technology
Shopify and the Rise of AI for Small Businesses
Shopify has announced its intention to use AI in its regular operations to help merchants efficiently manage their stores. The e-commerce site has implemented AI programs that edit images, provide… -
Technology
Revolutionizing Polystyrene Recycling: Polystyvert Raises $16 Million in First Tranche of Series B Funding
Polystyvert, a Montral-based cleantech startup, has raised $16 million CAD in the first closing of its Series B round. The all-equity round’s initial close was led by Dutch venture capital (“VC”) firm… -
Technology
Heart of Innovation: Kardium Secures $143 Million CAD for Commercial Launch
Kardium is a medical solutions company headquartered in Vancouver that has developed a device to treat atrial fibrillation, an irregular and often rapid heart rhythm. The device consists of a Globe… -
Technology
The Future of TV Streaming in a Changing Industry
On June 4, 2024, the Government of Canada announced a new tax under the Online Streaming Act that would require streaming services making over $25 million CAD per year to pay a 5% tax on their… -
Technology
BoldHue: Transforming the Beauty Industry with New Funding
BoldHue, a beauty-tech company founded by Rachel Wilson and Karin Lee, has recently secured $3.37 million USD in funding to help develop and launch its personalized foundation device. This device aims…