Appeals court upholds law ordering China-based ByteDance to sell TikTok or face U.S. ban

A federal appeals court on Friday cited national security concerns as it upheld a law requiring China-based ByteDance to sell the popular social media app TikTok next month or face an effective ban in the United States.

The unanimous ruling by a three-judge panel of the U.S. Court of Appeals in Washington, D.C., rejected TikTok's argument that the law is unconstitutional and violates the First Amendment rights of the 170 million Americans who use the app.

TikTok said later Friday that it will ask the U.S. Supreme Court to overturn the appeals court decision.

If ByteDance fails to sell TikTok by Jan. 19, the law would require app store companies, such as Apple and Google, and internet hosting providers to stop supporting TikTok, which would effectively ban the app.

"Today's decision is an important step in blocking the Chinese government from weaponizing TikTok to collect sensitive information about millions of Americans, to covertly manipulate the content delivered to American audiences, and to undermine our national security," said Attorney General Merrick Garland in a statement. The attorney general is head of the Department of Justice, which is defending the law in the suit by ByteDance and TikTok.

"As the D.C. Circuit recognized, this Act protects the national security of the United States in a manner that is consistent with the Constitution," Garland said.

President Joe Biden signed the law in April after members of Congress from both parties raised concerns about TikTok's alleged connections to the Communist Chinese government. Rep. Troy Balderson, R-Ohio, in March, called TikTok "a surveillance tool used by the Chinese Communist Party to spy on Americans and harvest highly personal data."

President-elect Donald Trump has not said whether he will enforce the ban when he takes office next month.

The appeals court in its majority opinion Friday found that the U.S. government had "offered persuasive evidence demonstrating that" the divestment law "is narrowly tailored to protect national security."

The opinion noted that TikTok "never squarely denies that it has ever manipulated content at the direction of the" People's Republic of China.

"On the merits, we reject each of the petitioners' constitutional claims," wrote Judge Douglas Ginsburg in the opinion.

"As we shall explain, the parts of the Act that are properly before this court do not contravene the First Amendment to the Constitution of the United States, nor do they violate the Fifth Amendment guarantee of equal protection of the laws; constitute an unlawful bill of attainder ... or work an uncompensated taking of private property in violation of the Fifth Amendment," the opinion said.

Ginsburg noted that the law was the result of "extensive, bipartisan action by the Congress and by successive presidents."

"It was carefully crafted to deal only with control by a foreign adversary, and it was part of a broader effort to counter a well substantiated national security threat posed by the PRC," the judge wrote. 

In a statement on the ruling posted on X, TikTok said, "The Supreme Court has an established historical record of protecting Americans' right to free speech, and we expect they will do just that on this important constitutional issue."

"Unfortunately, the TikTok ban was conceived and pushed through based upon inaccurate, flawed and hypothetical information, resulting in outright censorship of the American people," the company said. "The TikTok ban, unless stopped, will silence the voices of over 170 million Americans here in the US and around the world on January 19th, 2025."

Patrick Toomey, deputy director of the American Civil Liberties Union's National Security Project, condemned Friday's ruling, saying it "sets a flawed and dangerous precedent, one that gives the government far too much power to silence Americans' speech online."

"Banning TikTok blatantly violates the First Amendment rights of millions of Americans who use this app to express themselves and communicate with people around the world," Toomey said. "The government cannot shut down an entire communications platform unless it poses extremely serious and imminent harm, and there's no evidence of that here."

Although TikTok said it will ask the U.S. Supreme Court to hear the case there is no automatic right of appeal to that court.

"So if you like TikTok, go out and vote for Trump," the now-president-elect wrote at the time.

Trump transition spokeswoman Karoline Leavitt told CNBC in November that the president-elect "will deliver" on his campaign promises.

CNBC has requested comment from Trump's transition team on Friday's ruling and his plans for TikTok.

Trump's position on TikTok may be influenced by other factors.

The president-elect tried to ban the app during his first administration.

But his rhetoric on TikTok began to turn after he met in February with billionaire Jeff Yass, a Republican megadonor and a major investor in Bytedance.

Yass' trading firm, Susquehanna International Group, owns a 15% stake in ByteDance while Yass maintains a 7% stake in the company, equating to about $21 billion, NBC and CNBC reported in March. That month it was also reported that Yass was a part owner of the business that merged with the parent company of Trump's Truth Social.