The Commerce Department said Thursday it would not implement an order that would have effectively halted the U.S. operations of Chinese-owned short-form video app TikTok, “pending further legal developments.”
The Department said it would delay enforcement of the order, which was set to take effect on Thursday, and would have prohibited U.S. companies from offering internet-hosting or content-delivery services to TikTok. Trump initially issued a ban on the app back in August, as the administration and a number of lawmakers expressed concerns over potential national security risks posed by TikTok’s Chinese-owned parent company, ByteDance, having access to U.S. user data.
TikTok has said it does not and would not share U.S. user data with the Chinese Community Party.
In announcing its decision, the Department noted a preliminary injunction against the app’s ban issued last month by U.S. District Judge Wendy Beetlestone in Philadelphia as a result of a suit by three TikTok stars, comedian Douglas Marland, fashion guru Cosette Rinab and musician Alex Chambers.
Beetlestone said the government’s planned ban “presents a threat to the ‘robust exchange of informational materials’” and thus likely goes beyond the authority given to the government under then International Emergency Economic Powers Act, which the administration has cited as giving it power to take action against the app.
Also this week, TikTok and ByteDance Ltd., requested that a federal appeals court in Washington, D.C., overturn an order by the Committee on Foreign Investment in the U.S. that ByteDance divest the company.
A TikTok spokeswoman said in a statement Thursday that it was “focused on continuing to engage [committee on foreign investment in the United States],” or CFIUS, in an effort to address the security concerns, “even as we disagree with them.” TikTok said in the appeals court filing that ByteDance had recently submitted a fourth version of a proposal that aimed to address U.S security concerns.
The company’s initial proposal in September, which received the preliminary endorsement of President Trump, would have seen Oracle and Walmart take a combined 20 percent stake in TikTok Global, a new U.S.-based company that would take over the app’s global operations. However, the U.S. government had taken issue with the large share that ByteDance would have kept in the company under that deal, according to the Wall Street Journal.
The initial proposal included the creation of “a new entity, wholly owned by Oracle, Walmart and existing U.S. investors in ByteDance, that would be responsible for handling TikTok’s U.S. user data and content moderation.” A U.S. entity could be formed in addition to a TikTok Global unit, according to the Journal.
The Treasury Department, which oversees CFIUS, said in a statement on Wednesday that it “remains focused on reaching a resolution of the national security risks” from TikTok.
ByteDance is working to reach an agreement with the U.S. government, according to the Journal. Any deal made by the U.S. and ByteDance would also need approval from Chinese authorities.