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TikTok Sues Trump Administration

By Eric Volkman – Aug 24, 2020 at 2:59PM

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The new lawsuit challenges the president's recent Executive Order barring companies from doing business with the video-sharing app developer.

TikTok, the wildly popular video-sharing service owned by China's ByteDance, is taking its grievance against the government to court. The company announced Monday that it has filed a lawsuit against the administration of President Trump, who earlier this month signed an Executive Order (EO) banning U.S. companies from doing business with ByteDance. TikTok's suit was submitted to a federal court in Los Angeles.

In its lawsuit, TikTok argues that the EO is entirely unjustified and violates the company's constitutional right to due process of law, among other transgressions.

Woman using a smartphone.

Image source: Getty Images.

The administration issued the EO over concerns that TikTok, with its apparent numerous security flaws, represents a "national emergency." 

"TikTok automatically captures vast swaths of information from its users, including Internet and other network activity information such as location data and browsing and search histories," the EO reads. This "threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information."

TikTok begs to differ. In a written statement, the company delivered the following rebuttal: 

[A]s the U.S. government is well aware, Plaintiffs have taken extraordinary measures to protect the privacy and security of TikTok's U.S. user data, including by having TikTok store such data outside of China (in the United States and Singapore) and by erecting software barriers that help ensure that TikTok stores its U.S. user data separately from the user data of other ByteDance products.

ByteDance has come under significant pressure to divest TikTok to a U.S. investor. So far, Microsoft (MSFT -1.48%) has held discussions with ByteDance to purchase the unit; Oracle (ORCL -2.65%) -- somewhat surprisingly as it operates mainly a database business -- is apparently also making a play. Earlier this month, Trump characterized Oracle as "a great company" that would be a suitable owner.

Neither Microsoft nor Oracle has yet commented on TikTok's lawsuit.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool has a disclosure policy.

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