TikTok Wins Round One: An Overview of Judge Nichols’s Preliminary Injunction Ruling
Sunday, Sept. 27, was a dramatic win for TikTok (which was only fitting, considering the style of its typical popular content). It had initially dodged sanctions thanks to its proposed deal with Oracle and Walmart, but enthusiasm for that deal had been waning in both Washington and Beijing (and for seemingly irreconcilable reasons). Barring judicial intervention, an initial sanction would have kicked in at midnight on Sunday, barring app stores under U.S. jurisdiction from continuing to carry the app or facilitating updates of it for existing users. Late in the day, however, a federal district court in Washington announced that it was granting TikTok’s motion for a preliminary injunction against implementation of the ban.
The court initially did not release its underlying opinion explaining the ruling, out of concern that it contained information that might need to be sealed. But the opinion is out now, and you can read it here. Meanwhile, here’s my summary of what you need to know about it:
1. Does this concern the IEEPA sanctions, the CFIUS divestment order, or both?
This concerns only the International Emergency Economic Powers Act (IEEPA) sanctions, not the separate Committee on Foreign Investment in the United States (CFIUS) order compelling ByteDance to divest itself of TikTok by mid-November. Indeed, Judge Carl Nichol’s preliminary injunction does not even extend to all of the IEEPA sanctions, most of which don’t take effect until the expiration of the CFIUS deadline in any event. It solely concerns the one IEEPA sanction that was to take effect Sunday at midnight: the aforementioned directive to providers not to continue to make TikTok’s app available or to facilitate updates of the app for existing users.
This is a critical point. Whether this ruling withstands further review or not, ByteDance still by mid-November must divest itself of TikTok under the CFIUS order.
2. Was this a “final” ruling on the merits, resolving these issues once and for all?
No, it was a ruling on a pretrial motion for a preliminary injunction. Such motions do require courts to engage on the merits, however, because “likelihood of success on the merits” is a central issue in the analysis. And where courts find that the movant is indeed likely to succeed on the merits, as happened here, that is generally thought to be a strong predictor of where that particular judge ultimately will come down on the issue.
All that said, the Justice Department will likely appeal this ruling (with or without an attempt to get the U.S. Court of Appeals for the District of Columbia Circuit to stay the order in the meantime, which would enable the app-store sanction to take effect after all). In short, there’s no reason to think Nichols will change his mind on this issue, but things will be up for grabs when the proceedings move to the D.C. Circuit, which probably will occur soon. Consider this ruling a dress rehearsal, then, albeit one with real consequences for the moment.
3. On what basis did Judge Nichols conclude that TikTok was likely to succeed on the merits?
TikTok raised a variety of arguments, but Nichols focused exclusively on two of them: the argument that this particular sanction cannot be squared with a pair of limitations embedded in the IEEPA itself, one protecting “informational materials” and the other protecting “personal communications” that do not involve a thing of value. Let’s look first at the text of those exemptions, and then let’s consider the court’s analysis.
While the statute does delegate to the president sweeping authority to sanction foreign entities, it contains a few express limitations (that is, situations in which Congress elected to retain authority for itself to exercise or not). They are found in 50 U.S.C. 1702(b), which in relevant part states:
(b)Exceptions to grant of authority
The authority granted to the President by this section does not include the authority to regulate or prohibit, directly or indirectly—
(1) any postal, telegraphic, telephonic, or other personal communication, which does not involve a transfer of anything of value;
(3) the importation from any country, or the exportation to any country, whether commercial or otherwise, regardless of format or medium of transmission, of any information or informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds. The exports exempted from regulation or prohibition by this paragraph do not include those which are otherwise controlled for export under section 4604 of this title, or under section 4605 of this title to the extent that such controls promote the nonproliferation or antiterrorism policies of the United States, or with respect to which acts are prohibited by chapter 37 of title 18; ...
Now let’s look closely at the court’s analysis.
First, it is worth noting that the court frames the government’s national security interests not as weak or pretextual but, if anything, as quite strong. Indeed, the court’s opinion provides the strongest case I have yet seen for the data-security justification for sanctioning TikTok (though it says less about the basis for the separate concerns relating to pro-Beijing censorship). The passage in the opinion about China’s National Intelligence Law is particularly striking in its emphasis on the stark obligations that law imposes on entities under Chinese jurisdiction (including ByteDance, of course, but also including Alibaba—which I had not previously realized owned the servers in Singapore that hold at least some U.S. person user data for TikTok, according to the opinion). So the court’s ruling is not a question of second-guessing or unfairly narrowing the scope of the government’s security interests. Instead, it is no more and no less than a claim that the IEEPA itself by its plain terms cannot be applied to this particular sort of foreign entity.
To make that case, Nichols begins with the proposition that the exceptions quoted above apply even if the sanction at issue merely implicates them indirectly. That’s clearly correct, as the statute uses that exact word.
Informational Materials Exported to or Imported From Other Countries
Next, Nichols addresses whether this fact pattern really involves indirect prohibition of “informational materials” of the kind protected by § 1702(b)(3). Noting the statute’s many examples, he finds this to be an easy case: Many if not most TikToks (that’s what you call content posted to TikTok) are the functional equivalent of films, posters, records, photographs, artwork, etc., after all. It therefore seems an easy case, at first blush, to conclude that the sanction at least indirectly burdens both the import and especially the export (for a sizable majority of TikToks viewed overseas are U.S. generated) of covered materials. And so concludes the court.
Is that analysis quite that simple, though? Look closer at the text of the exception. It does not refer to the ability of Americans to receive communications from, or send communications to, the specific foreign entity that is the subject of the sanction in a particular case. Instead, it speaks of the ability of Americans to receive information sent “from any country” and to export information “to any country.” Would even complete and immediate eradication of TikTok’s app really result in a limitation on the ability of Americans to receive information abroad from any particular country, or to send information abroad to any particular country? Or would this instead simply redirect such efforts to other channels?
It is interesting, in this respect, to contrast the TikTok situation with the contemporaneous and closely related sanctions targeting WeChat. WeChat, famously, has a unique and dominant role enabling communications between people in China and the broader Chinese diaspora. Shutting it down, WeChat has argued, really does cut off the flow of information across borders (because, it must be emphasized, China itself has precluded analogous U.S. companies from operating in the country). I’ve not seen any analysis suggesting that anything of that sort is true with respect to TikTok.
Perhaps this does not matter; perhaps it is enough that there is some quantum of burden on the sharing of information across some borders. The statute is silent on this point, after all. But it seems to me this issue requires discussion, and I hope that when the litigation moves on to the D.C. Circuit the court will engage in a serious way with it.
Personal Communications That Do Not Transfer Value
But what about the other exception, the one for personal communications? That exception does not have the “any country” language I emphasized above and, instead, appears to be a flat ban on the application of IEEPA sanctions in circumstances that would indirectly burden a personal communication, so long as that communication is not transferring value.
The court assumes that it is obvious that TikToks count as personal communications, much as would a letter I might send to someone in Paris. That may be correct; the court suggests that the government didn’t even dispute this point. But perhaps it should have. Most TikToks are not one-to-one communications as in the paradigm case of a letter I might send to someone overseas. Rather, most are put forward for public viewing, preferably by as many people as possible. They are much better categorized as “informational materials,” as the court’s analysis of that separate exception convincingly demonstrated.
At any rate, there is then the question of whether TikToks transfer value in individual instances. On their face, few if any do. But the government quite correctly observes that TikTok’s entire business model is predicated on the idea that each TikTok nonetheless indirectly but genuinely is a valuable exchange with the company, providing the product that draws an audience and thus advertising dollars—not to mention providing data that has aggregate value to the company as well. The court gives this argument short shrift, reasoning that “even a letter a person drops in the mail adds some value to the mail carrier” and that this alone is not enough to allow the application of sanctions in a way that forbids people from mailing personal letters. And perhaps that is a sufficient analogy to put the “transfer of anything of value” argument to bed. But I’m not sure it’s quite that easy. TikTok is less of a foreign-owned FedEx or USPS, and more of a many-to-many broadcast network (among other things). This point too deserves a deeper dive.