TikTok avoids US ban on new downloads in last-minute ruling

Dive Brief:

  • A federal judge temporarily blocked a Trump administration order to ban new downloads of TikTok from app stores in the U.S. The last-minute ruling gives the video-sharing platform’s parent ByteDance more time to negotiate a deal that would put its U.S. operations in the hands of investors Oracle and Walmart, The Wall Street Journal reported.
  • Judge Carl Nichols of the U.S. District Court in Washington asked TikTok and the U.S. government to propose a timeline for more detailed arguments, and didn’t immediately explain his ruling of an indefinite block on the U.S. ban. The judge also didn’t rule on the U.S. Commerce Department’s plan to implement a full ban on TikTok that would make the app completely unusable in the U.S. after Nov. 12.
  • TikTok aims to maintain discussions with the U.S. government to receive approval on a proposed agreement that would avoid a permanent ban. For now, the app has been granted something of a reprieve that could help sustain growth at a critical moment.

Dive Insight:

Marketers that are either running campaigns on TikTok or may be planning to do so continue to face uncertainty about the app’s future in the U.S. While TikTok has scored a short-term victory to keep its app running in U.S. app stores, parent company ByteDance still needs to receive approval from the U.S. and Chinese governments on a proposed deal to sell TikTok’s U.S. operations.

Still, the ruling issued Sunday could be crucial for propping up TikTok in the coming weeks as ByteDance tries to sort out the app’s longer-term fate. The Trump administration’s order would have blocked new downloads of the app and also the software updates that keep its services functional and evolving to meet user needs. If the order had gone into effect as planned, it’s very possible that TikTok’s growth would be stymied in a key market, while its user experience would deprecate over time.

TikTok is currently suing the Trump administration over the order on a U.S. ban, claiming it has not properly detailed how the platform poses a national security risk.

“We’re pleased that the court agreed with our legal arguments and issued an injunction preventing the implementation of the TikTok app ban,” TikTok said in a statement cited by CNBC. “We will continue defending our rights for the benefit of our community and employees.”

It’s an unfortunate predicament for TikTok and marketers that want another alternative to dominant digital advertising platforms like Google, Facebook and Amazon. TikTok has 100 million users in the U.S., including 50 million who check in every day, and is especially popular with Generation Z, a demographic elusive to traditional channels like linear TV. TikTok’s social media rivals have developed features in their apps to mimic TikTok, hoping to draw away audiences as a potential ban looms.

The outcome of ByteDance’s negotiations is unclear amid heated rhetoric from the Trump administration and the Chinese government about national security issues and the status of TikTok’s technology. The U.S. government wants reassurances that personal data about TikTok users in the U.S. won’t end up in the hands of China’s government. TikTok has said that it doesn’t share data about U.S. users with China, and wouldn’t do so if pressured, though that claim has been questioned by critics. Meanwhile, China wants to prevent ByteDance’s intellectual property, such as TikTok’s algorithm for viral videos that’s considered a key asset, from being transferred outside the country.

Conflicting claims about a sale agreement that received President Trump’s tentative approval have further complicated the narrative. ByteDance last week said it would own 80% of TikTok Global, a newly created U.S. company that would be a subsidiary to oversee most operations worldwide. The same day of that announcement, Oracle issued a statement saying ByteDance’s ownership of TikTok Global would be distributed to investors, and that ByteDance wouldn’t own the company. The statements offered contradictory explanations of an earlier joint statement saying Oracle would own 12.5% of TikTok Global and provide cloud computing services, while Walmart would own 7.5% and provide e-commerce support to TikTok.

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