By Chris Castle

Let’s be honest–it may look like things are getting weird with TikTok and Bytedance, but let me suggest things are maybe even weirder than they appear. New information has come to light.

First of all, I think it’s clear that at least as of January 19, the Protecting Americans from Foreign Adversary Controlled Applications Act will make it unlawful for companies in the United States to provide services to distribute, maintain, or update the social media platform TikTok, unless U. S. operation of the platform is severed from Chinese control which basically means owned by Bytedance. It’s potentially clear–although the situation is changing daily in Trump time–that the statute may also ban a number of other data-scraping apps owned and distributed by Bytedance that have problems and addictive properties similar to TikTok.

After TikTok’s faux shut down, President Trump immediately got into the act to “Save TikTok”. His first move was to post on social media that he would issue an executive order today “delaying” the effectiveness of the Act. Mr. Trump’s statements may have seemed a bit disjointed because from a statutory point of view, the President does not have the authority to “delay” the effectiveness of the Act. In fact, that is exactly what the Supreme Court just refused to do.

But “Saving TikTok” may not mean saving TikTok if you catch my drift. Saving it for whom exactly?

This may all seem rather bizarre, but if you read President Trump’s “Friend of the Court” brief filed during the Supreme Court’s review of TikTok’s request for a delay in enforcing the Act, it would all be clear–maybe–because that is exactly what he asked the Supreme Court to do–delay the effective date so the could apply Art of the Deal principles to the situation. This is, of course, not what the Supreme Court really is about, but it does reveal what was on his mind. The President says:

In light of this Court’s well-placed concerns about the “highly expedited” resolution of novel, difficult, and “very significant” constitutional questions…the Court should consider staying the statutory deadline for divestment and taking time to consider the merits in the ordinary course. Such an approach would allow this Court more breathing space to consider the merits, and it would also allow President Trump’s Administration the opportunity to pursue a negotiated resolution that, if successful, would obviate the need for this Court to decide these questions.

When a statute has been duly passed by Congress and signed into law by the then-sitting President (Biden) and upheld by the Supreme Court, the next President as chief magistrate must likely enforce the law under the “Take Care” clause of the Constitution (“take care that the laws be faithfully executed” in Article II, Section 3 for those reading along at home).

Of late there has, of course, been an unfortunate reliance on what I think is a misinterpretation of “prosecutorial discretion” that I personally find loathsome and flat out wrong. Prosecutorial discretion historically has been decisions based on resources and the strength of the evidence in particular cases; doing otherwise often results in the prosecutor getting unelected (see, e.g., Chesa Boudin and George Gascon). We’ll see if this dubious practice will continue.

Without getting into the entire history of executive orders that exceed presidential authority, there isn’t a clear precedent for a presidential executive order actually limiting the enforcement of an act of Congress that has been upheld by the Supreme Court (like the TikTok divestment). One notable and frequently cited case is Youngstown Sheet & Tube Co. v. Sawyer (1952), where the Supreme Court struck down then-President Harry Truman’s executive order to seize control of steel mills during the Korean War. The Court ruled that President Truman lacked the constitutional or statutory authority to issue such an order in a somewhat but not entirely similar situation to TikTok. In general, executive orders are subject to judicial review, and it is pretty old news that the Supreme Court has the power to strike down executive actions that exceed presidential authority or violate the Constitution. That principle of US law was established in 1803 by our first Chief Justice of the Supreme Court.

Having said that, I do understand why President Trump is trolling TikTok, or at least I think I do today. As he said in a speech to his supporters regarding a solution for TikTok’s problem (and has repeated a number of times since his inauguration):

So I said very simply, a joint venture. So, if TikTok is worth nothing, zero without an approval, you know you don’t approve, they’re out of business, they’re worth nothing.

If you do approve, they’re worth like a trillion dollars, they’re worth some crazy number. So I said, I’ll approve, but let the United States of America own 50% of TikTok. I’m approving on behalf of the United States.

So they’ll have a partner, the United States, and they’ll have a lot of bidders and the United States will do what we call a joint venture. And there’s no risk, we’re not putting up any money. All we’re doing is giving them the approval without which they don’t have anything.

As I’ve said before, President Trump has all the leverage that anyone could have in a situation where the Chinese Communist Party has their eye fixed on an IPO on the New York Stock Exchange. Not to be conspiratorial, but I do find it interesting that shortly before the Supreme Court decision, Softbank’s CEO committed to investing $100 billion in the US–Softbank being a major investor in TikTok and a beneficiary of that IPO and the same CEO just committed a portion of $500 billion to the Stargate AI infrastructure investment alongside Oracle and OpenAI.

I do think that someone might challenge any executive order that is inconsistent with the Truman precedent in the Youngstown Supreme Court case. The Supreme Court could probably strike down such an executive order. In the meantime, President Trump will likely be trying to close a deal to sell TikTok and destroy the CCP’s connection to user data. At some point, Congress may have to get involved again to bless whatever the final deal is.

So could Trump pull this off? Oh, yes, he could. It would be unusual, but not impossible in my judgement. Murky, yes. But when the dust settles, it looks like TikTok doesn’t have much of a choice. They will either hand over 50% of its company to the US (either in the form of voting power (like “golden shares“), stock or a financial interest), or they can shut down. And it may not just be TikTok–it may be all of the Bytedance companies that have a TikTok problem. Even though giving up a 50% share would essentially cut in half any ownership stake of Softbank, there may be some tolerance given that the alternative is zero–not just for TikTok, by the way, but potentially all of the Bytedance companies.

Is giving up 50% of your company because your lawyers and lobbyists failed a happy thing? Do you think Xi Jinping is in the habit of giving a hug when someone he’s paid a fortune to fails miserably? Not really. I would not want to be the food taster for TikTok’s head lobbyists.

Of course, the US should not take on any of TikTok’s obligations or litigation, such as the Multidistrict Social Media Addiction Litigation which potentially has massive liabilities for TikTok. TikTok’s benefit from social media addiction should not be lost on anyone given the user reaction that TikTok has riled up. Social media addiction is a real thing. 

Stay tuned, we’ll see what happens. Whatever happens, it won’t change the fact that TikTok pays garbage royalties if they pay at all.