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