A US District Court has postponed a ban on popular short video app TikTok, which would have stopped the distribution of the app from Apple and Google’s app stores after 11:59 pm on September 27. US District Judge Carl J. Nicholas granted TikTok this preliminary injunction on Sunday, and this means that the app will be available on both the app stores for now. Nicholas’s reasons for postponing the ban are sealed and will have to be reviewed by TikTok and the US government.
However, not everything went TikTok’s way at the hearing on Sunday. Nicholas denied to postpone another, more comprehensive, ban on TikTok which is scheduled to come into effect on November 12 “at this time”. As per this ban, even existing users of Tiktok will not be able to use the app. Earlier, a similar ban on WeChat in the US was also stayed.
What they said: The Commerce Department, in a statement said that the government will comply with the injunction and “has taken immediate steps to do so, but intends to vigorously defend the E.O. [executive order]”.
“We’re pleased that the court agreed with our legal arguments and issued an injunction preventing the implementation of the TikTok app ban. We will continue defending our rights for the benefit of our community and employees,” TikTok said in a statement.
Key background: On August 6, Donald Trump signed an executive order banning US transactions with Bytedance over national security concerns, and the order was to initially come into effect on September 20. However, on September 19, a tentative deal was signed between TikTok, Oracle and Walmart, which will result in the creation of a new entity called TikTok Global, where Oracle and Walmart will own a 20% stake. Following this announcement, the Commerce Department had postponed the ban until 11:59 pm on September 27.
In response to the August 6 order, Tiktok had filed a lawsuit against the Trump administration, arguing that the executive order was a “gross misappropriation” of the International Emergency Economic Powers Act (IEEPA) and a “pretext for furthering the President’s broader campaign of anti-China rhetoric in the run-up to the U.S. election”. TikTok also said that the August 6 executive order failed to follow due process and act in good faith, neither providing evidence that TikTok was an actual threat, nor justification for its punitive actions.
TikTok, Oracle, Walmart in the middle of a complicated deal
On September 19, it seemed as if TikTok’s future in the US was somewhat secured after Oracle and Walmart announced that they will pick up a 20% stake in TikTok Global, which will provide TikTok services to users in the US and “most of the users in the rest of the world”. Trump even gave this deal his “blessing” and had “approved the deal in concept.” Oracle will acquire 12.5% of the short video app, whereas Walmart will pick up a 7.5% stake. As part of the deal, Oracle will become TikTok’s “secure cloud provider”. Oracle also said it will combine its secure cloud technology with “continuous code reviews, monitoring, and auditing” to keep US users’ data safe. Walmart on the other hand is looking to boost its marketplace and ad business through the deal.
However, that was until ByteDance said that it will own 80% of TikTok Global. Following ByteDance’s announcement, Trump threatened the deal will not be approved if ByteDance retains control of the company. Oracle, too, hit out at the company, claiming that ByteDance will have no ownership of TikTok Global. “Upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global,” Oracle had said at the time.
“We will also maintain our ongoing dialogue with the government to turn our proposal, which the President gave his preliminary approval to last weekend, into an agreement,” TikTok added in its statement.