TikTok is banned. Long live TikTok?
This morning, the Supreme Court unanimously upheld the enactment by Congress of the “Protecting Americans from Foreign Adversary Controlled Applications Act.” The PAFACAA (an acronym I do not recommend saying three times quickly, but at least it isn’t named after a person or shoehorned into spelling a word) is popularly understood to put ByteDance, Ltd. (the Chinese parent of TikTok) to a choice: It must sell TikTok to a non-Chinese parent, or TikTok must cease operating within the United States.
Will either of those things happen? Legally, there’s no third option. The Court left no ambiguity that could be challenged further. But there are two related problems: executive non-enforcement and how the law is supposed to be enforced. The former problem is that Joe Biden reportedly doesn’t want to be bothered trying to enforce the law, and Donald Trump has publicly announced that he intends to negotiate a deal to save TikTok, and he will have TikTok’s chairman at his inauguration. His statements this morning on Truth Social, before the decision:
I just spoke to Chairman Xi Jinping of China. The call was a very good one for both China and the U.S.A. It is my expectation that we will solve many problems together, and starting immediately. We discussed balancing Trade, Fentanyl, TikTok, and many other subjects. President Xi and I will do everything possible to make the World more peaceful and safe!
After: “The Supreme Court decision was expected, and everyone must respect it. My decision on TikTok will be made in the not too distant future, but I must have time to review the situation. Stay tuned!”
Consider how the statute works (emphases are mine). The law states that it “shall be unlawful for an entity to distribute, maintain, or update (or enable the distribution, maintenance, or updating of)” TikTok within the U.S. This legal prohibition extends specifically to two types of conduct. The first: “providing services to distribute, maintain, or update such foreign adversary controlled application (including any source code of such application) by means of a marketplace (including an online mobile application store) through which users within [the U.S.] may access, maintain, or update such application.”
That targets Apple, Google, and other cellphone companies that make the TikTok app available through their app stores and support it on their devices. If they comply with the law, new users won’t be able to get TikTok, and existing users will at minimum be cut off from updates and other maintenance, causing the app to become unworkable over time. It may well even be read by Apple and Google to require them to no longer “maintain” the app by enabling it to provide user data back to ByteDance. Much of the devil at this step is in technical details and how they are initially interpreted by the American companies subject to the law.
The second ban is on “providing internet hosting services to enable the distribution, maintenance, or updating of such foreign adversary controlled application for users within the land or maritime borders of the United States.” TikTok is available on the web as well as through the app, and the statute defines “foreign adversary controlled application” to include “a website, desktop application, mobile application, or augmented or immersive technology application” that is operated by ByteDance or TikTok. So this will hit the site’s internet hosting as well as its use as an app. In the first instance, that too is a decision to be made by web-hosting companies. The app won’t work without hosting, but a host outside the United States might be able to keep it afloat — so long as the hosting companies are in a jurisdiction where they are beyond the reach of American courts.
The potential penalties on Apple, Google, and the hosting companies are grave. They are exposed to civil penalties of $5,000 per United States user, which can be a crazy amount of money for such a widely used app: Across all 170 million users, that’s $850 billion dollars in potential penalties. How long are they willing to run that risk?
The fines are not self-executing, of course. The attorney general “shall conduct investigations related to potential violations” and “shall pursue enforcement” of the fines and “may bring an action in an appropriate district court of the United States for appropriate relief, including civil penalties under paragraph (1) or declaratory and injunctive relief.” No matter how mandatory the language, it is difficult to avoid the executive branch’s discretion. While it may seem disgraceful for the Biden administration to signal disinterest in enforcement, realistically, the ban goes into effect only on Sunday, followed by a federal holiday, during which Biden leaves office at noon. So, it actually is not realistically feasible for his Justice Department to file a civil enforcement action in court between the effective date of the statute and the end of his term. In practical effect, this will be up to Trump.
Moreover, the statute explicitly states that nothing in its language “may be construed to authorize the Attorney General to pursue enforcement, under this section, other than enforcement of” the civil penalty provisions, or to authorize the AG to go after “an individual user” of TikTok. This would, among other things, appear to bar DOJ from criminally prosecuting anybody.
The civil penalty provisions do not apply if a qualifying divestiture agreement “is executed before” January 19 (a deadline there’s no discretion to extend), and they “shall cease to apply” in the case where “a qualified divestiture is executed after” January 19. So, a subsequent sale can remove all prospective penalties — and if one is arranged, it would not be hard to imagine Congress going along with providing a formal rescission of the statutory penalties accrued to that point.
Moreover, in the interim, Trump has one 90-day window to pause enforcement: He “may grant a 1-time extension of not more than 90 days” if he personally “certifies to Congress that (A) a path to executing a qualified divestiture has been identified with respect to such application; (B) evidence of significant progress toward executing such qualified divestiture has been produced with respect to such application; and (C) there are in place the relevant binding legal agreements to enable execution of such qualified divestiture during the period of such extension.”
Trump legally can’t do this unless there are actual talks and agreements about a divestiture that would qualify under the statute. But that, too, raises some unresolved questions about how a false certification (if there are no such agreements) could be challenged in court if made. But even so, it would buy TikTok only 90 days. It does, however, let Trump swoop in to insert himself into a negotiation, which is where he prefers to be.
In summary: The fate of TikTok, in the short run, will be in the hands of tech-company executives who have to ask themselves how much of their company’s money they are willing to bet on the word of Donald Trump that he won’t enforce the law.