Restricting TikTok (Part I): Legal History and Background

Restricting TikTok (Part I): Legal History and Background

Legal Sidebari

Restricting TikTok (Part I): Legal History and
Background
Updated September 28, 2023
The video-sharing platform TikTok has experienced a dramatic rise in users in the United States in recent
years, while at the same time some Members of Congress and Biden Administration officials have
described the application (app) as a national security threat. During the Trump Administration, concerns
about TikTok’s data security and connections to the People’s Republic of China (PRC) led to the attempt
to restrict the app’s U.S. operations. In decisions that inform the current legislative debate, two federal
district courts concluded that aspects of the restrictions were unlawful because they exceeded the
President’s statutory authority. Other elements of the Trump Administration’s efforts have been continued
by the Biden Administration and are ongoing. This Sidebar discusses these past executive-branch-led
efforts. A companion Sidebar examines current legislative proposals to restrict TikTok and constitutional
and other legal considerations for Congress to consider when crafting legislation. Other CRS products
discuss legal challenges to Montana’s ban of the app and policy options to address related data privacy
and national security concerns posed by TikTok.
Trump Administration Initiatives
President Trump sought to leverage two legal frameworks to restrict TikTok’s U.S. presence and
operations: the International Emergency Economic Powers Act (IEEPA) and the legal authorities
underpinning the Committee on Foreign Investment in the United States (CFIUS).
IEEPA-Based Restrictions
As discussed in this CRS Report, IEEPA authorizes the President to regulate a variety of commercial
transactions and to block (i.e., freeze) foreign-owned property and assets subject to the jurisdiction of the
United States. Before invoking these authorities, the President, following the procedures of the National
Emergencies Act, must declare a national emergency related to an “unusual and extraordinary threat,
which has its source in whole or substantial part outside the United States.”
In 2019, President Trump laid the groundwork to invoke IEEPA by declaring a national emergency (2019
Emergency Declaration) based on foreign adversaries’ ability to exploit vulnerabilities in the U.S.
information and communication technology and services (ICTS) supply chain. In August 2020, the
President issued an executive order (2020 Order), which invoked the President’s IEEPA authority to
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restrict TikTok’s U.S. operations in response to the ICTS emergency. Under authority delegated by the
2020 Order, the Secretary of Commerce issued a list of prohibited transactions, which included
maintaining TikTok on a mobile app store or providing internet hosting services to it.
Contemporaneously, President Trump issued another executive order (WeChat Order) that restricted U.S.
operations of WeChat—a PRC-based messaging, social media, and electronic payment app, discussed in
this CRS Report. This Sidebar largely focuses on TikTok regulation except when the WeChat Order may
be relevant.
Judicial Challenges to the IEEPA-Based Restrictions
Two sets of lawsuits followed the Trump Administration’s IEEPA-based restrictions on TikTok—one filed
by TikTok and its parent company, ByteDance, Ltd., and another by a group of TikTok users. The
plaintiffs in both suits raised several statutory and constitutional claims that the restrictions were
unlawful, but the courts’ decisions focused on whether the Trump Administration exceeded its statutory
authority by regulating conduct that fell into IEEPA’s exceptions.
While IEEPA grants extensive authority to the President to restrict or prohibit transactions under certain
conditions, the statute also lists categories of conduct that the President cannot regulate. Two exceptions
were the focus of the litigation. Under the personal communication exception, the President may not
restrict “any postal, telegraphic, telephonic, or other personal communication, which does not involve a
transfer of anything of value.” Under the informational materials exception (sometimes called the Berman
Amendment after its legislative sponsor, Representative Howard Berman), the President cannot restrict
most “information or informational materials, including but not limited to, publications, films, posters,
phonograph records, photographs ... artworks, and news wire feeds.”
The plaintiffs argued that TikTok’s core function—creating and sharing short-form videos—involved
transmitting personal communications and informational materials, albeit in a modern format. The
Department of Commerce (Commerce) had sought to avoid this argument by limiting its restrictions to
“business-to-business transactions” rather than TikTok users’ personal exchange of communication and
information. The courts ultimately sided with the plaintiffs and issued preliminary injunctions temporarily
barring the United States from enforcing the restrictions. Both courts described the government actions as
effectively banning TikTok from operating in the United States. In the case brought by TikTok and
ByteDance, the court concluded that the plaintiffs were likely to prevail on the argument that the ban ran
afoul of both relevant exceptions. In the TikTok users’ case, the court limited its decision to the
information materials exception.
A group of WeChat users also challenged the Trump Administration’s restrictions on that app in a separate
case. A federal district court similarly granted a preliminary injunction in favor of the WeChat users, but it
did so on First Amendment grounds, which are analyzed in Part II of this Sidebar. The United States
appealed the injunctions in both sets of cases. After the Biden Administration withdrew the underlying
executive orders in June 2021, the parties agreed to voluntarily dismiss all of the cases before the appeals
were decided.
CFIUS Review
The Trump Administration’s other public TikTok initiative, which the Biden Administration has not
withdrawn, is based on the CFIUS process. CFIUS is an interagency committee chaired by the Secretary
of the Treasury that reviews foreign investments in the United States for potential national security risks.
Its statutory authority derives from Section 721 of the Defense Production Act, as amended and codified
in 50 U.S.C. § 4565. CFIUS traditionally reviews mergers, acquisitions, and takeovers that could result in
a foreign entity taking control of a U.S. business. Amendments to its statutory authorities enacted in 2018

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(discussed in this In Focus) expanded CFIUS’s jurisdiction to cover a select set of non-controlling
investments and real estate transactions.
When a transaction falls in its ambit and CFIUS determines there is sufficient national security risk,
CFIUS can impose mitigation measures and recommend to the President whether to prohibit or suspend
the transaction. The President has the ultimate authority to prohibit or suspend a covered transaction if the
President finds there is credible evidence that the transaction would threaten to impair national security
and could not be addressed using authorities in other laws. The President’s authority to block transactions
is both forward- and backward-looking, meaning Presidents can block planned transactions and require
parties to divest (i.e., unwind) completed deals.
In TikTok’s case, CFIUS’s review concerned ByteDance’s acquisition of another video-based social
media company called musical.ly. ByteDance purchased musical.ly for $1 billion in 2017 and merged its
operations into the TikTok app the next year. By 2020, President Trump concluded that this acquisition
threatened U.S. national security and issued an order (Divestment Order) directing ByteDance to divest
(1) its assets used to support TikTok’s U.S. operations and (2) data obtained or derived from TikTok or
musical.ly users in the United States.
TikTok and ByteDance filed a judicial challenge in November 2020, arguing that the Divestment Order
violated constitutional protections against taking private property without just compensation and deprived
them of their due process rights under the Fifth Amendment. TikTok and ByteDance also argued that the
Order did not comply with the statutory requirements in the Administrative Procedure Act. After the
transition to the Biden Administration, TikTok, ByteDance, and the executive branch jointly requested
that the court hold the case in abeyance while the parties sought to determine whether the case could be
resolved by agreement. The court granted that request in February 2021 and directed the parties to file
status reports every sixty days. According to the status report submitted in August 2023, the parties
continue to negotiate whether the litigation can be resolved by mutual agreement. CFIUS has not formally
commented on these negotiations, but TikTok has publicly described some elements of the negotiations in
letters to Members of Congress and in briefings to the media.
The Information and Communications Technology and Services (ICTS)
Supply Chain Rule and Data Executive Order
In January 2021, Commerce issued an interim final rule and request for comments (Supply Chain Rule)
that does not name TikTok directly, but could be relevant to U.S. efforts to restrict the app’s operations.
Discussed in this In Focus, the Supply Chain Rule creates a new interagency process led by Commerce
that can review certain ICTS transactions—a term now broadly defined in regulation. If a covered ICTS
transaction involves foreign adversaries and presents certain undue or unacceptable risks identified in the
precursor executive order, Commerce can either prohibit the transaction or negotiate mitigation measures
to address national security risks.
In June 2021, President Biden expanded on the Supply Chain Rule through an executive order titled
Protecting Americans’ Sensitive Data from Foreign Adversaries (Data Executive Order). The Data
Executive Order rescinded several Trump Administration orders, including the 2020 Order and WeChat
Order, and replaced them with new initiatives designed to address risks posed by foreign-owned and -
controlled apps. The Data Executive Order left other Trump-era orders in place, including the 2019
Emergency Declaration and the Divestment Order.
As one initiative, the Data Executive Order directed Commerce to consider special criteria when
evaluating whether to block ICTS transactions that involve apps under the Supply Chain Rule’s review
process. In a June 2023 Final Rule, Commerce added new app-specific risk factors and clarified that
transactions involving apps may be subject to the Supply Chain Rule. Some observers viewed these

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developments as a signal that the Biden Administration would use the Supply Chain Rule’s review
process to restrict foreign-owned apps like TikTok. As of September 2023, Commerce has not blocked
any transactions using the Supply Chain Rule, and its only public action under the rule has been to
subpoena PRC-based companies that provide ICTS in the United States.
One possible explanation for the lack of executive action may be the Supply Chain Rule’s legal
foundations. The authorities that undergird the rule include elements of IEEPA and the 2019 Emergency
Declaration—the same authorities used for the 2020 Order that was enjoined by federal courts and later
rescinded. Because the Supply Chain Rule is IEEPA-based, it is likely that it would be subject to the same
personal communications and informational materials exceptions that were at issue in litigation during the
Trump Administration.
The limitations that IEEPA’s exceptions place on the President’s power to restrict cross-border
transactions have led some Members of Congress to propose additional legislative authorities that, among
other things, would remove the personal communications and informational materials exceptions. These
proposals and the constitutional provisions that they could implicate are explored in a second installment
of this two-part Sidebar.

Author Information

Stephen P. Mulligan

Legislative Attorney

Disclaimer
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