Speaker 1: TikTok will be banned in the United States unless it
Speaker 1: sells the app or wins a court case before January nineteenth.
Speaker 1: A key hearing was held on September sixteenth. How did
Speaker 1: it go, What's next and how is the issue likely
Speaker 1: to be resolved. This is a Vote in Verdicts Brief.
Speaker 2: Hello and welcome to the Votes in Verdicts podcast hosted
Speaker 2: by Bloomberg Intelligence, part of Bloomberg's research department, with five
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Speaker 2: My name's Elliott Stein. I'm a senior litigation analyst with
Speaker 2: Bloomberg Intelligence covering financials litigation.
Speaker 1: And I'm Matt Schuttenhelm, an analyst covering US litigation and
Speaker 1: policy in the TMT space.
Speaker 2: So our Votes in Verdicts Brief series highlights one of
Speaker 2: our research reports on the Bloomberg terminal, giving you quick
Speaker 2: takeaways to help you grasp a key litigation or policy topic. Today,
Speaker 2: we're going to talk about the threat of a TikTok
Speaker 2: ban in the United States. So, Matt, before we get
Speaker 2: into the hearing that took place on September sixteenth, can
Speaker 2: you just remind us, you know, give us some of
Speaker 2: the background here and remind us how Congress addressed a
Speaker 2: TikTok ban earlier this year.
Speaker 1: Yeah, sure, Elliott. So yeah, after years of discussing it,
Speaker 1: Congress finally got around to passing a law on TikTok
Speaker 1: and it did so by overwhelming bipartisan margins in April
Speaker 1: of this year, and President Biden signed it into law.
Speaker 1: And what that law does is it that it says
Speaker 1: that two hundred and seventy days after the law was signed,
Speaker 1: which takes us to January nineteenth, no company in the
Speaker 1: US may carry TikTok in an app store or host
Speaker 1: it on a server in a way that allows the
Speaker 1: app to be distributed, maintained, or updated in the United States.
Speaker 1: And so, since that's law now as of January nineteenth,
Speaker 1: unless TikTok complies with the law, and the only way
Speaker 1: to comply is to sell the app to a company
Speaker 1: without ties to China. If it doesn't do that, the
Speaker 1: app is effectively banned, as I said, And so this
Speaker 1: is obviously very significant for TikTok's leading competitors in the
Speaker 1: United States, companies like Meta and Alphabet. So that's where
Speaker 1: we stand generally with what Congress did, Elliott right.
Speaker 2: And then so after Congress did that, TikTok brought a
Speaker 2: First Amendment case, and the key argument was September sixteenth,
Speaker 2: And we should say that we are recording this on
Speaker 2: September nineteenth. You were in the courtroom for that oral argument.
Speaker 2: What are your takeaways? You know, in your view, how
Speaker 2: should TikTok feel about its chances here?
Speaker 1: Well, well, not very good was really my number one
Speaker 1: takeaway as I walked out of the courtroom on Monday.
Speaker 1: You know, TikTok made the case that this is really
Speaker 1: an unprecedented attack on the First Amendment. The government effectively
Speaker 1: shutting down one of the leading speech platforms, one used
Speaker 1: by one hundred and seventy million Americans, and its briefs
Speaker 1: in the case offered a number of ways that the
Speaker 1: court could find flaws in this law or at least
Speaker 1: hit pause on that January nineteenth date. And my takeaway
Speaker 1: from the argument was that with these three judges on
Speaker 1: this panel, TikTok's leading arguments got very little traction, and
Speaker 1: instead one of the judges, a Trump appointee, Nao Murrau,
Speaker 1: brought up a nineteen eighty eight president that allows the
Speaker 1: government to shut down a foreign affairs office because of
Speaker 1: national security concerns. She said, this is Congress. This is
Speaker 1: not a federal agency. We don't second guess Congress in
Speaker 1: the same way. Another judge, a Reagan appointee, Douglas Ginsburg,
Speaker 1: suggested that the government was justified in treating TikTok differently
Speaker 1: than other companies because it had been in years of
Speaker 1: negotiations with it over this, and an Obama appointee on
Speaker 1: the panel, Srie Shromi Vasen, brought up Supreme Court Justice
Speaker 1: amy Cony Barrett's statement in July that the First Amendment
Speaker 1: just plays out differently when we're talking about foreign ownership
Speaker 1: and control. So walking into that argument, I thought TikTok
Speaker 1: might be a slight favorite to at least slow this down.
Speaker 1: Walking out, I no longer thought that I now give it.
Speaker 1: You know, it's not a sure thing. You never know
Speaker 1: after all argument, but I now give TikTok only about
Speaker 1: a twenty percent chance of prevailing at the DC Circuit.
Speaker 2: And so sort of walk us through the next steps.
Speaker 2: You know, when do you anticipate that the DC Circuit
Speaker 2: will rule. What happens after that is at the end
Speaker 2: of the story. I'm guessing it's not. But maybe just
Speaker 2: walk us through what you anticipate after the DC Circuit.
Speaker 1: Rules, Right, So, this is not a typical case. This
Speaker 1: is an expedited case because of that January nineteenth deadline looming,
Speaker 1: and so the early filings in this case asked the
Speaker 1: d C Circuit to rule by early December. I think
Speaker 1: it's by the end of the first week of December.
Speaker 1: I expect the court to try to honor that request
Speaker 1: given the deadline that's looming. So I think we'll see
Speaker 1: a ruling pretty quickly from the DC Circuit. And if
Speaker 1: it goes against TikTok, TikTok's only going to have two
Speaker 1: options at that point in theory. It could it could
Speaker 1: do a quick request for rehearing en bank, which is basically,
Speaker 1: instead of just taking this case to the three judges
Speaker 1: at the d C Circuit that heard the case on Monday,
Speaker 1: it would ask all the active judges to reconsider that ruling.
Speaker 1: That rarely happens at the DC's circuit or in any
Speaker 1: federal court of appeals. And here, given the timing, I
Speaker 1: wouldn't be surprised if TikTok says, you know, we'll just
Speaker 1: skip that one. The chances of that succeeding are so
Speaker 1: low and the time is so short that they go
Speaker 1: to their only other option, and that is go to
Speaker 1: the u US Supreme Court. And there there's not again
Speaker 1: time for a full US Supreme Court case before January nineteenth.
Speaker 1: But what you you'll likely see from TikTok is an
Speaker 1: emergency request for a stay to say that this is
Speaker 1: such an important First Amendment issue that at least the
Speaker 1: Supreme Court should hit pause, slow this down and consider
Speaker 1: this issue and stop that January nineteenth deadline while the case,
Speaker 1: while the court takes up the case.
Speaker 2: And how do you think the US Supreme Court will
Speaker 2: receive an application with Yeah, so.
Speaker 1: I really think I think that's a long shot. You know,
Speaker 1: I think TikTok will will have a strong argument that
Speaker 1: this is a novel case, it's an important case. But
Speaker 1: at the same time, this is a tight national security deadline.
Speaker 1: And judges don't have a lot of interest in getting
Speaker 1: in the way of Congress's judgments here and hitting pause
Speaker 1: on an national security deadline. TikTok. Yes, it will have
Speaker 1: a strong case that it's irreparably harmed, which is one
Speaker 1: of the standards for a stay. But if it gets
Speaker 1: slapped down by a d C. Circuit decision saying that
Speaker 1: its First Amendment case isn't very strong, it's not going
Speaker 1: to have a very strong case that it's likely to win.
Speaker 1: And so while I can't rule it out, it wouldn't
Speaker 1: surprise me at all if the Supreme Court looks at
Speaker 1: what the DC Circuit says here and says, you know,
Speaker 1: they basically got it right. There's no need to get
Speaker 1: in the way of this, Yeah, and to stop it.
Speaker 2: Yeah. Interesting, And what about the US elections coming up
Speaker 2: in November? Do you think those have any impact on
Speaker 2: this case? Yeah?
Speaker 1: So, I mean, so this law has already passed, it's
Speaker 1: on the book, so there's nothing more for Congress or
Speaker 1: the President to do directly on this. But I think
Speaker 1: there's a way that the election could impact this case.
Speaker 1: And there there's a way the case could impact the election.
Speaker 1: So let's take the first one. The The election could
Speaker 1: impact the case if TikTok somehow can pull out a victory,
Speaker 1: and I think that's unlikely, but if they do and
Speaker 1: the courts still strike down this law, in that event,
Speaker 1: there's a very real possibility that President Trump, if if
Speaker 1: he were to win the White House, won't sign a
Speaker 1: second law. Congress would have to go back and fix
Speaker 1: any flaws, and President Trump would need to sign it.
Speaker 1: He's he used to be in favor of a TikTok man,
Speaker 1: he's recent more least recently reversed his position on that,
Speaker 1: so Congress might not be able to get it through
Speaker 1: again if it's forced to do so. I think the
Speaker 1: case could also impact the election if we see the
Speaker 1: DC Circuit decide this case before people votes, and and
Speaker 1: and rules against TikTok, all of a sudden, that's going
Speaker 1: to shine light on this issue, and it could let
Speaker 1: President Trump play up his his pro TikTok views, potentially
Speaker 1: in an appeal to young voters. So it's at least
Speaker 1: potentially possible that this issue emerges as a bit of
Speaker 1: an October surprise.
Speaker 2: That is so interesting. All right, I think we're gonna
Speaker 2: leave it there, thank you. Matt Chettanhelm. That is today's
Speaker 2: votes and Verdicts brief. For our full report on this
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