TikTok goes the clock: Federal appeals court upholds divestiture law
Decision adds fresh uncertainty for e-commerce marketers as app’s Chinese parent ByteDance must sell its stake or face U.S. ban.
HIGH POINT — E-commerce retailers relying on TikTok for advertising face fresh uncertainty after a federal appeals court upheld a law that could ban the platform in the U.S. unless its Chinese parent company, ByteDance, divests its ownership.
The ruling, handed down by the U.S. Court of Appeals for the District of Columbia Circuit, comes as the app battles heightened scrutiny over national security concerns.
“We conclude the portions of the Act the petitioners have standing to challenge, that is the provisions concerning TikTok and its related entities, survive constitutional scrutiny. We therefore deny the petitions,” wrote the appeals court’s senior judge in the majority opinion.
A foreign aid package passed by Congress in April and signed by President Biden gives TikTok until Jan. 19, 2025, to sever ties with ByteDance or risk losing access to U.S. app stores and web-hosting services. A potential 90-day extension is possible if a sale is underway.
This decision may disrupt advertising strategies for e-commerce businesses that rely on TikTok’s 170 million U.S. users to drive sales. Retailers now face the possibility of reduced reach or needing to pivot to alternative platforms as the app’s future hangs in the balance.
The ruling also sets the stage for a potential Supreme Court showdown, which could determine whether TikTok remains accessible. The Court could either give the law a stay while arguments are considered or refuse to take it up, which would let the lower court ruling stand.
Until then, advertisers and marketers will be watching to see if TikTok can make the necessary moves to survive as they await clarity on the platform’s fate.
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