Legal Alert: The TikTok Ban: What It Means for Users and Businesses

In a textbook example of whiplash, the ongoing legal battle over TikTok’s status in the United States has been full of twists and turns. Two primary questions stand-out in this on-going legal saga. (1) Will TikTok be permanently banned? (2) What does the TikTok ban mean for users and businesses?

U.S. politicians, consumer advocacy groups, and child safety organizations have raised concerns over TikTok’s ties to the Chinese government, data privacy issues, and the impact on children exposed to content on the app. In April 2024, President Biden signed a law requiring ByteDance, TikTok’s China-based parent company, to divest from TikTok’s U.S. operations or face a market ban. The law imposes a $5,000 civil penalty per user on service providers, i.e. the Apple App Store and Google Play Apps, for violations of the ban, potentially exposing ByteDance to billions of dollars in legal liabilities. The deadline for divestment was set for January 19, 2025—just one day before President Trump’s inauguration.

In a protracted legal battle, the U.S. Supreme Court unanimously upheld the law, ruling it constitutional. The Court weighed national security risks against free speech concerns, ultimately deciding that the law, aimed at preventing China from accessing sensitive data from 170 million U.S. TikTok users, did not infringe on Petitioners’ First Amendment rights. It concluded that the law’s focus on divesting TikTok from a foreign adversary did not directly regulate Petitioners’ speech or content.

In a court filing, Blake Chandlee, TikTok’s President of Global Business Solutions, warned that a U.S. shutdown of TikTok would result in a $1.3 billion loss in revenue within a month. Small businesses would lose $1 billion, while two million U.S. content creators would lose $300 million. Citing an Oxford Economics report, Chandlee noted that 69% of businesses reported increased sales from TikTok, and 39% considered it vital to their operations. He also highlighted that TikTok’s advertising, marketing, and organic reach contributed $24.2 billion to U.S. GDP in 2023, with TikTok’s own operations adding another $8.5 billion. ByteDance, TikTok’s parent company, is mostly owned by institutional investors like BlackRock and General Atlantic, and employs over 7,000 people in the U.S.

After the Supreme Court upheld the law limiting TikTok’s presence in the U.S., the platform disabled its services for U.S. users on January 18, 2025, before the law took effect. However, the following day, TikTok restored access, highlighting in its statement that President Trump provided the “necessary clarity and assurance… enabling over 7 million small businesses to thrive.” Trump stated he would “extend the period of time before the law’s prohibitions take effect, allowing us to negotiate a deal that safeguards our national security.” On his Truth Social platform, he added, “I would like the United States to hold a 50% ownership stake in a joint venture.”

As of today, TikTok’s service remains operational in the United States but unavailable for download on app stores. On his first day in office, President Trump signed an executive order directing the Department of Justice to stand down, allowing TikTok to continue operating for 75 more days.

President Trump’s executive order has faced criticism from lawmakers who backed the TikTok ban, which passed with broad bipartisan support and was signed by former President Biden. While executive orders can’t override laws passed by Congress, lawmakers have previously gone to court to enforce their laws. However, legal experts suggest a lawsuit from Congress may not succeed, as courts might see it as a political or national security issue within the executive branch’s control.

The future of TikTok in the U.S. remains unclear, with legal battles and President Trump’s executive order postponing the law requiring ByteDance to sell its U.S. operations. For small businesses that depend on TikTok for marketing and sales, this uncertainty is more than just a legal issue; it’s a real concern for their livelihoods. With billions of dollars on the line and no clear end in sight, many small business owners are left in limbo. This situation underscores how national security concerns, legal authority, and the everyday needs of businesses are all tangled together, affecting real people in the process.

If your business is affected by these changes, please reach out to us. Kessler Collins is poised to provide the legal support you need to navigate these challenges and protect your interests.