TikTok Faces US Ban After Appeals Court Refuses to Block Law

(Bloomberg) — TikTok’s Chinese parent company faces a ban in the US if it doesn’t meet a Jan. 19 deadline to sell the video-sharing app as a result of a federal appeals court ruling Friday.

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A three-judge panel in Washington unanimously upheld a new US law enacted to protect national security and user privacy, ruling that it didn’t violate free speech protections under the Constitution’s First Amendment. The decision leaves the Supreme Court as the company’s last realistic hope for stopping the law from taking effect.

“The First Amendment exists to protect free speech in the United States,” Judge Douglas Ginsburg wrote for the panel. “Here the government acted solely to protect that freedom from a foreign adversary nation and to limit that adversary’s ability to gather data on people in the United States.”

Although the ban kicks in the day before President-elect Donald Trump is inaugurated, his opposition to it could still complicate its enforcement. Trump spoke out against a ban as he courted younger Americans in his campaign despite trying to force its sale during his first term.

The ruling from the US Court of Appeals for the DC Circuit would make it harder for Trump to reverse the ban, according to Matthew Schettenhelm, an analyst for Bloomberg Intelligence. If the company turns to the Supreme Court, Schettenhelm said the justices are unlikely to block the law on an emergency basis.

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More than 170 million Americans use TikTok — owned by China-based ByteDance Ltd. — as a source of entertainment and information or as a platform to build their businesses. A Pew Research survey released in September showed about 17% of US adults regularly receive news from the app, representing a fivefold jump from 2020.

Lawmakers said the legislation was necessary to prevent China from using the app to obtain information on US citizens or spread propaganda. The US government didn’t offer evidence that China had used the app to influence US citizens or steal data as part of the case.

TikTok and a group of content creators claimed that the law tramples free-speech rights by silencing users, even while news outlets with foreign ownership continue to operate in the US.

The prospect of Americans being barred from using TikTok has sparked a backlash from users as well. Only 32% of US adults back the ban, according to a recent Pew survey.

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Among those likely to benefit from a TikTok ban are Alphabet Inc.’s Google, Meta Platforms Inc. and Snap Inc., because they’re likely to see an increase in use of their own social-media platforms, according to Bloomberg Intelligence. Oracle Corp. could take a hit because it offers internet hosting services to TikTok.

The appellate panel that decided the case consisted of Chief Judge Sri Srinivasan, a Barack Obama appointee; Neomi Rao, who was appointed by Trump; and Ginsburg, a Ronald Reagan appointee.

The case is TikTok v. Garland, 24-1113, US Court of Appeals, District of Columbia Circuit (Washington).

–With assistance from Greg Stohr.

(Updates with opinion in third paragraph.)