A second federal judge has granted his second preliminary injunction preventing the federal government from effectively shutting TikTok down as the legal saga of the wildly popular video sharing app continues.
The ruling by U.S. District Judge Carl Nichols said the government had “exceeded the express limitations” of IEEPA – the Emergency Economic Power Act it used to bring the suit. The act can ban transactions between the U.S. and foreign companies. The U.S. Commerce Department had cited privacy and security concerns in U.S. dealings with TikTok, whose parent ByteDance is a giant Chinese conglomerate.
Judge Nichols, in Washington, D.C., in late September had granted a preliminary injunction that allowed consumers to continue downloading TikTok from U.S. app stores.
In October, a Pennsylvania federal judge had also stopped the service from shutting down in a ruling on a separate lawsuit brought by three TikTok creators.
The TikTok fracas started when President Trump, in an August 6 executive order, required ByteDance to sell the platform to American owners or it would be shut down in the U.S. The administration seemed to have approved a bid led by Oracle and Walmart but nothing has been announced on that front for some time and it’s not clear if ByteDance or the Chinese government have approved the deal. The latest deadline for a divestiture passed without comment by the administration on December 4.
Dan Ives, an analyst with Wedbush Securities, said in a note last week that the incoming Biden Administration is expected to have a much softer tone towards China. “Ultimately the TikTok ‘Rubik’s Cube’ political situation could get kicked down the road another month through legal and other deal delays by ByteDance.”
As part of the tentative deal, Oracle would take a 12.5% stake in a new entity called TikTok Global that would be supported by Oracle’s Cloud Infrastructure. Including Walmart and other investors, mainly venture capital firms, U.S. shareholders are expected to control 53% of TikTok Global. North of 50% U.S, ownership was a key threshold for the Trump administration. Oracle has said it will provide assurance that US TikTok user data is secure.
Judge Nichol asked the parties to “meet, confer and file a Joint Status Report proposing a schedule for further proceedings” by Dec. 18.
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