TikTok’s Lawsuit Against Trump Order Faces Long Odds


Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.


Steven Davidoff Solomon, a.k.a. the Deal Professor, is a professor at the U.C. Berkeley School of Law and the faculty co-director at the Berkeley Center for Law, Business and the Economy. Here, he considers the prospects for TikTok’s legal challenge against the White House.

TikTok’s lawsuit is a delaying tactic, at best.

President Trump has issued two executive orders targeting ByteDance, TikTok’s Beijing-based parent company. The first, issued on Aug. 6, cites powers under the International Emergency Economic Powers Act and the National Emergencies Act to bar any U.S. person from transacting with TikTok, starting 45 days after the announcement.

The second, issued on Aug. 14, ordered ByteDance to sell TikTok to a U.S. owner within 45 days. It relies on the Exon-Florio Amendment of the Defense Production Act, which allows the president to order a foreign company to divest U.S. assets if their purchase is perceived to have hurt national security. (The transaction in question here is ByteDance’s acquisition of Musical.ly, TikTok’s predecessor, in 2017.)

On the Exon-Florio order, there is one previous case to go on: President Barack Obama’s order requiring Ralls, a Chinese-owned firm, to sell a wind farm it had bought that was deemed too close to a U.S. military base. Ralls sued, and a federal court ruled that while a foreign company was entitled to due process rights, like being able to examine the unclassified information used in the order, the substance of the decision is not challengeable. Ultimately, Ralls still had to dispose of the wind farm, but with more leeway to choose the buyer.