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TikTok Parent ByteDance Challenges Divestment Order in US Appeals Court

UTC by Bhushan Akolkar · 3 min read
TikTok Parent ByteDance Challenges Divestment Order in US Appeals Court
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TikTok is seeking further time and clarity for the operations of its new TikTok Global thus requesting the extension of the divestment period by additional 30 days.

The small video-sharing app TikTok had a tough time dealing with the Trump administration. On Tuesday, November 10, TikTok parent ByteDance filed a petition with the US Appeals Court challenging the divestment order put by the Trump administration.

Earlier this year on August 14, President Donald Trump asked TikTok to divest its app in 90 days. The deadline for the order is the coming Thursday. TikTok currently has over 100 million monthly active users in the US. The Trump administration issued the divestment order while stating that TikTok poses national security concerns. It also alleged that TikTok has been sending private user data from the US to the Chinese government.

In its latest petition, ByteDance has asked for a court review for the divestment order. The Chinese tech giant notes that the Trump administration order and findings were unlawful under the US Constitution. In September, ByteDance decided to float a new entity called TikTok Global with two US companies – Oracle Corporation (NYSE: ORCL) and Walmart Inc (NYSE: WMT) getting a 7.5% stake each. Now, TikTok is also requesting a 30-day extension for its divestment order to finalize the terms of the deal. In its latest statement, the company wrote:

“Facing continual new requests and no clarity on whether our proposed solutions would be accepted, we requested the 30-day extension that is expressly permitted in the August 14 order. Without an extension in hand, we have no choice but to file a petition in court to defend our rights”.

ByteDance Has Issues with TikTok’s Ownership Structure in US

Although President Trump concluded the deal in 2020, there have been issues and doubts about the ownership structure of the new entity. As per the deal, TikTok Global will own all the assets of the US operations. Besides, it has to go for a public listing over the period of next year.

ByteDance said that it had submitted a fourth proposal last Friday addressing US concerns. In its court filing, ByteDance noted that it wants to file a request “to stay enforcement of the Divestment order only if discussions reach an impasse and the government indicates an intent to take action to enforce the order.”

It states that the order by the Trump administration and the Committee on Foreign Investment in the United States (CFIUS), “seek to compel the wholesale divestment of TikTok, a multi-billion-dollar business built on technology developed by” ByteDance “based on the government’s purported national security review of a three-year-old transaction that involved a different business.”

On Tuesday, TikTok also said that it didn’t receive any “substantive feedback” on its “data privacy and security framework”. It will be interesting to see further developments in this regard going ahead. With the new administration possibly in place, TikTok might get some respite in its US operations.

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