D.C. Circuit Panel Skeptical of ByteDance Claims That TikTok Divestiture Is Unconstitutional

ByteDance/TikTok lawyer Andrew Pincus of Mayer Brown and O’Melveny & Myers’ Jeffrey Fischer, who represents the content creators, argued Congress violated the First Amendment in enacting the law. The statute “is unprecedented and its effect would be staggering,” Pincus told the D.C. Circuit panel. He disputed that ByteDance is under Chinese government control because it’s legally a “Cayman Islands holding company.” DOJ claims of future Chinese control are “indeterminate future risks,” Pincus said. He also argued it would be “unfeasible” for ByteDance to divest its U.S. operations only.

“For the first time in history, Congress has expressly targeted a specific U.S. speaker banning its speech and the speech of 170 million Americans,” Pincus said. “No compelling reason justifies Congress acting like an enforcement agency and specifically targeting” TikTok. “Congress didn’t do any of the things the First Amendment requires,” he said: The federal “government’s solution to foreign propaganda” has previously always been to pursue “disclosure, not a ban.” Fisher argued that a U.S. ban would prevent creators based in the country from exercising their First Amendment right “to work with the publisher and editor of our choice, even if it is a foreign editor.”

DOJ lawyer Daniel Tenny argued that the divestiture law is necessary because TikTok’s collected data on U.S. users is “extremely valuable to a foreign adversary trying to compromise the security of” the country. “It poses a grave national security risk.” Tenny acknowledged that TikTok users’ “speech may be affected,” but “that really is an indirect effect of what is going on here.” There is “really no dispute ... that the recommendation engine” TikTok uses “is maintained, developed and written by ByteDance rather than” its U.S. arm, he said: “It is not expression by Americans in America. It is expression by Chinese engineers in China.”

D.C. Circuit Chief Judge Sri Srinivasan wasn't impressed with Pincus’ argument about TikTok’s relationship with Beijing. The company is clearly “subject to Chinese control” no matter where it’s legally based, the judge said. In addition, Srinivasan drew a distinction between Congress’ action against TikTok and the Florida and Texas social media laws the Supreme Court remanded to state courts in July for further review in NetChoice v. Paxton and Moody v. NetChoice (see 2407010053). “Once you put an interest in play that is called ‘content manipulation,’ that sets off First Amendment alarm bells when you don’t have foreign control,” Srinivasan said.

Judge Neomi Rao said the TikTok law “is also regulating foreign ownership, which is a separate, nonexpressive interest of the federal government.” It would be “quite a remarkable determination to make for this court” that Congress can’t pursue TikTok’s divestiture rather than requiring only disclosure of its Chinese government ties, Rao said. She argued TikTok was proposing a “strange framework” for the court to review Congress’ actions to the same degree it does for federal regulators. “Congress doesn't legislate all the time, but here they did, they passed a law.”

Judge Douglas Ginsburg likewise questioned ByteDance’s description of the law’s effects, saying it was “an absolute bar on the current arrangement of control” of TikTok only, not the entire company. He argued ByteDance has a “blinkered view” of the law, which he believes targeted only companies under the control of U.S. foreign adversaries. “Instead of saying foreign control, let’s say adversary control,” Ginsburg said.