After the Supreme Court heard oral arguments on a law that could ban TikTok, it appears that one of the last possible lifelines is unlikely to save it from imminent collapse.
TikTok will be banned from the US unless the Supreme Court blocks the law from taking effect before a January 19 deadline or its China-based parent company, ByteDance, finally agrees to sell it. A sale — and return — of TikTok could happen after the deadline, and President-elect Donald Trump could get creative in trying to skirt the law after he takes the oath of office tomorrow. But the longer it takes, the shakier things look for TikTok.
Bloomberg Intelligence senior litigation analyst Matthew Schettenhelm gave TikTok a 30 percent chance of winning at the Supreme Court before oral arguments, but he lowered that prediction to just 20 percent after hearing the justices’ question. TikTok made a recent plea for the court to issue an administrative stay without signaling a ruling on the merits of the law, something Trump has suggested so he can try to broker a sale of TikTok. Schettenhelm says that’s unlikely — the court doesn’t tend to issue that kind of break just because of a change in administration, he adds, and it’s unlikely to want to set that precedent.
A brief order in the case could come Friday afternoon, after the justices are scheduled to meet. The court is also scheduled to issue orders Monday morning, though Schettenhelm cautions against reading into it if nothing is released by then — it could simply mean they’re working out their reasoning in a longer written order.
Trump has said he’d like to keep the app, and in theory, he could declare he won’t enforce the sell-or-ban law. But Justice Sonia Sotomayor noted that even if he chooses not to enforce the law, it may not provide enough protection for companies like Apple and Google — which could be fined $5,000 for each user who accesses TikTok if they keep it in their app stores. US Solicitor General Elizabeth Prelogar said the statute of limitations is five years; those companies will continue to violate the law as long as it remains on the books, and they could face penalties even after Trump leaves office, if the next administration chooses to enforce it.
“I think those companies would be taking a huge risk to not comply with the law in the hope that President Trump won’t enforce it against them,” Schettenhelm says. “You get into hundreds of billions of dollars of potential liabilities. And even if President Trump says, ‘don’t worry about it, I’m not going to hold it against you, do you really want to take the chance that he won’t change his mind about it? Do you really want to give him that level of leverage over your company? I doubt it.”
“I don’t see another social media company that is in a similar position to TikTok.”
Schettenhelm doesn’t believe a ruling against TikTok would set a precedent that threatens US-based social media companies. “I don’t see another social media company that’s in a similar situation to TikTok,” he says, noting that the arguments centered mostly on ownership. Foreign-owned e-commerce companies like Shein and Temu that emerged may be a different story. But, he says, “none of that really came out as an imminent danger just because of that argument.”
In contrast, Cornell University law professor and First Amendment expert Gautam Hans agrees that the justice is unlikely to overturn the law, but he worries that such a decision could have broader implications for other companies. During arguments, judges and lawyers for TikTok and its users debated hypotheses about whether allowing a ban on certain types of corporate structure (such as ownership by a Chinese parent company) would allow for behind-the-scenes speech regulations — including requiring that the owner of a company to sell it punish him for protected speech. But these concerns did not seem to be disruptive to the court.
“What remains unfortunate is the credulity with which many of the judges treated this law, which clearly implicates free speech rights for unspecified national security reasons,” Hans said in a statement. “I don’t think the distinction between foreign and domestic ownership is stable enough to alleviate my concerns that a decision upholding the ban on TikTok creates a slippery slope.”
