WEBVTT - TikTok-Ban Risk Soars After Key Court Hearing

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<v Speaker 1>TikTok will be banned in the United States unless it

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<v Speaker 1>sells the app or wins a court case before January nineteenth.

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<v Speaker 1>A key hearing was held on September sixteenth. How did

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<v Speaker 1>it go, What's next and how is the issue likely

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<v Speaker 1>to be resolved. This is a Vote in Verdicts Brief.

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<v Speaker 2>Hello and welcome to the Votes in Verdicts podcast hosted

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<v Speaker 2>by Bloomberg Intelligence, part of Bloomberg's research department, with five

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<v Speaker 2>hundred analysts and strategists working across all major world markets.

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<v Speaker 2>well as outlooks on more than ninety industries and one

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<v Speaker 2>hundred market indices, currencies, and commodities. In this podcast series,

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<v Speaker 2>we talk about the intersection of business policy and law.

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<v Speaker 2>My name's Elliott Stein. I'm a senior litigation analyst with

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<v Speaker 2>Bloomberg Intelligence covering financials litigation.

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<v Speaker 1>And I'm Matt Schuttenhelm, an analyst covering US litigation and

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<v Speaker 1>policy in the TMT space.

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<v Speaker 2>So our Votes in Verdicts Brief series highlights one of

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<v Speaker 2>our research reports on the Bloomberg terminal, giving you quick

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<v Speaker 2>takeaways to help you grasp a key litigation or policy topic. Today,

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<v Speaker 2>we're going to talk about the threat of a TikTok

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<v Speaker 2>ban in the United States. So, Matt, before we get

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<v Speaker 2>into the hearing that took place on September sixteenth, can

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<v Speaker 2>you just remind us, you know, give us some of

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<v Speaker 2>the background here and remind us how Congress addressed a

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<v Speaker 2>TikTok ban earlier this year.

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<v Speaker 1>Yeah, sure, Elliott. So yeah, after years of discussing it,

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<v Speaker 1>Congress finally got around to passing a law on TikTok

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<v Speaker 1>and it did so by overwhelming bipartisan margins in April

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<v Speaker 1>of this year, and President Biden signed it into law.

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<v Speaker 1>And what that law does is it that it says

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<v Speaker 1>that two hundred and seventy days after the law was signed,

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<v Speaker 1>which takes us to January nineteenth, no company in the

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<v Speaker 1>US may carry TikTok in an app store or host

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<v Speaker 1>it on a server in a way that allows the

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<v Speaker 1>app to be distributed, maintained, or updated in the United States.

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<v Speaker 1>And so, since that's law now as of January nineteenth,

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<v Speaker 1>unless TikTok complies with the law, and the only way

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<v Speaker 1>to comply is to sell the app to a company

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<v Speaker 1>without ties to China. If it doesn't do that, the

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<v Speaker 1>app is effectively banned, as I said, And so this

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<v Speaker 1>is obviously very significant for TikTok's leading competitors in the

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<v Speaker 1>United States, companies like Meta and Alphabet. So that's where

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<v Speaker 1>we stand generally with what Congress did, Elliott right.

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<v Speaker 2>And then so after Congress did that, TikTok brought a

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<v Speaker 2>First Amendment case, and the key argument was September sixteenth,

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<v Speaker 2>And we should say that we are recording this on

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<v Speaker 2>September nineteenth. You were in the courtroom for that oral argument.

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<v Speaker 2>What are your takeaways? You know, in your view, how

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<v Speaker 2>should TikTok feel about its chances here?

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<v Speaker 1>Well, well, not very good was really my number one

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<v Speaker 1>takeaway as I walked out of the courtroom on Monday.

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<v Speaker 1>You know, TikTok made the case that this is really

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<v Speaker 1>an unprecedented attack on the First Amendment. The government effectively

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<v Speaker 1>shutting down one of the leading speech platforms, one used

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<v Speaker 1>by one hundred and seventy million Americans, and its briefs

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<v Speaker 1>in the case offered a number of ways that the

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<v Speaker 1>court could find flaws in this law or at least

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<v Speaker 1>hit pause on that January nineteenth date. And my takeaway

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<v Speaker 1>from the argument was that with these three judges on

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<v Speaker 1>this panel, TikTok's leading arguments got very little traction, and

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<v Speaker 1>instead one of the judges, a Trump appointee, Nao Murrau,

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<v Speaker 1>brought up a nineteen eighty eight president that allows the

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<v Speaker 1>government to shut down a foreign affairs office because of

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<v Speaker 1>national security concerns. She said, this is Congress. This is

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<v Speaker 1>not a federal agency. We don't second guess Congress in

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<v Speaker 1>the same way. Another judge, a Reagan appointee, Douglas Ginsburg,

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<v Speaker 1>suggested that the government was justified in treating TikTok differently

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<v Speaker 1>than other companies because it had been in years of

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<v Speaker 1>negotiations with it over this, and an Obama appointee on

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<v Speaker 1>the panel, Srie Shromi Vasen, brought up Supreme Court Justice

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<v Speaker 1>amy Cony Barrett's statement in July that the First Amendment

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<v Speaker 1>just plays out differently when we're talking about foreign ownership

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<v Speaker 1>and control. So walking into that argument, I thought TikTok

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<v Speaker 1>might be a slight favorite to at least slow this down.

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<v Speaker 1>Walking out, I no longer thought that I now give it.

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<v Speaker 1>You know, it's not a sure thing. You never know

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<v Speaker 1>after all argument, but I now give TikTok only about

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<v Speaker 1>a twenty percent chance of prevailing at the DC Circuit.

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<v Speaker 2>And so sort of walk us through the next steps.

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<v Speaker 2>You know, when do you anticipate that the DC Circuit

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<v Speaker 2>will rule. What happens after that is at the end

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<v Speaker 2>of the story. I'm guessing it's not. But maybe just

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<v Speaker 2>walk us through what you anticipate after the DC Circuit.

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<v Speaker 1>Rules, Right, So, this is not a typical case. This

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<v Speaker 1>is an expedited case because of that January nineteenth deadline looming,

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<v Speaker 1>and so the early filings in this case asked the

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<v Speaker 1>d C Circuit to rule by early December. I think

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<v Speaker 1>it's by the end of the first week of December.

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<v Speaker 1>I expect the court to try to honor that request

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<v Speaker 1>given the deadline that's looming. So I think we'll see

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<v Speaker 1>a ruling pretty quickly from the DC Circuit. And if

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<v Speaker 1>it goes against TikTok, TikTok's only going to have two

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<v Speaker 1>options at that point in theory. It could it could

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<v Speaker 1>do a quick request for rehearing en bank, which is basically,

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<v Speaker 1>instead of just taking this case to the three judges

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<v Speaker 1>at the d C Circuit that heard the case on Monday,

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<v Speaker 1>it would ask all the active judges to reconsider that ruling.

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<v Speaker 1>That rarely happens at the DC's circuit or in any

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<v Speaker 1>federal court of appeals. And here, given the timing, I

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<v Speaker 1>wouldn't be surprised if TikTok says, you know, we'll just

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<v Speaker 1>skip that one. The chances of that succeeding are so

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<v Speaker 1>low and the time is so short that they go

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<v Speaker 1>to their only other option, and that is go to

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<v Speaker 1>the u US Supreme Court. And there there's not again

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<v Speaker 1>time for a full US Supreme Court case before January nineteenth.

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<v Speaker 1>But what you you'll likely see from TikTok is an

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<v Speaker 1>emergency request for a stay to say that this is

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<v Speaker 1>such an important First Amendment issue that at least the

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<v Speaker 1>Supreme Court should hit pause, slow this down and consider

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<v Speaker 1>this issue and stop that January nineteenth deadline while the case,

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<v Speaker 1>while the court takes up the case.

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<v Speaker 2>And how do you think the US Supreme Court will

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<v Speaker 2>receive an application with Yeah, so.

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<v Speaker 1>I really think I think that's a long shot. You know,

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<v Speaker 1>I think TikTok will will have a strong argument that

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<v Speaker 1>this is a novel case, it's an important case. But

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<v Speaker 1>at the same time, this is a tight national security deadline.

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<v Speaker 1>And judges don't have a lot of interest in getting

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<v Speaker 1>in the way of Congress's judgments here and hitting pause

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<v Speaker 1>on an national security deadline. TikTok. Yes, it will have

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<v Speaker 1>a strong case that it's irreparably harmed, which is one

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<v Speaker 1>of the standards for a stay. But if it gets

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<v Speaker 1>slapped down by a d C. Circuit decision saying that

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<v Speaker 1>its First Amendment case isn't very strong, it's not going

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<v Speaker 1>to have a very strong case that it's likely to win.

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<v Speaker 1>And so while I can't rule it out, it wouldn't

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<v Speaker 1>surprise me at all if the Supreme Court looks at

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<v Speaker 1>what the DC Circuit says here and says, you know,

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<v Speaker 1>they basically got it right. There's no need to get

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<v Speaker 1>in the way of this, Yeah, and to stop it.

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<v Speaker 2>Yeah. Interesting, And what about the US elections coming up

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<v Speaker 2>in November? Do you think those have any impact on

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<v Speaker 2>this case? Yeah?

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<v Speaker 1>So, I mean, so this law has already passed, it's

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<v Speaker 1>on the book, so there's nothing more for Congress or

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<v Speaker 1>the President to do directly on this. But I think

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<v Speaker 1>there's a way that the election could impact this case.

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<v Speaker 1>And there there's a way the case could impact the election.

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<v Speaker 1>So let's take the first one. The The election could

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<v Speaker 1>impact the case if TikTok somehow can pull out a victory,

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<v Speaker 1>and I think that's unlikely, but if they do and

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<v Speaker 1>the courts still strike down this law, in that event,

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<v Speaker 1>there's a very real possibility that President Trump, if if

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<v Speaker 1>he were to win the White House, won't sign a

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<v Speaker 1>second law. Congress would have to go back and fix

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<v Speaker 1>any flaws, and President Trump would need to sign it.

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<v Speaker 1>He's he used to be in favor of a TikTok man,

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<v Speaker 1>he's recent more least recently reversed his position on that,

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<v Speaker 1>so Congress might not be able to get it through

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<v Speaker 1>again if it's forced to do so. I think the

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<v Speaker 1>case could also impact the election if we see the

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<v Speaker 1>DC Circuit decide this case before people votes, and and

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<v Speaker 1>and rules against TikTok, all of a sudden, that's going

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<v Speaker 1>to shine light on this issue, and it could let

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<v Speaker 1>President Trump play up his his pro TikTok views, potentially

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<v Speaker 1>in an appeal to young voters. So it's at least

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<v Speaker 1>potentially possible that this issue emerges as a bit of

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<v Speaker 1>an October surprise.

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<v Speaker 2>That is so interesting. All right, I think we're gonna

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<v Speaker 2>leave it there, thank you. Matt Chettanhelm. That is today's

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<v Speaker 2>votes and Verdicts brief. For our full report on this

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<v Speaker 2>topic and all of our research, please visit bi laws

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