A U.S. federal appeals court on Friday upheld a law requiring Chinese-based ByteDance to divest its popular short video app TikTok in the United States by early next year or face a ban.
The ruling could be appealed to the Supreme Court or full appeals court panel.
U.S. appeals court Judges Sri Srinivasan, Neomi Rao and Douglas Ginsburg considered the legal challenges brought by TikTok and users against the law that gives ByteDance until Jan. 19 to sell or divest TikTok's U.S. assets or face a ban.
The appeals court said the law “was the culmination of extensive, bipartisan action by the Congress and by successive presidents. It was carefully crafted to deal only with control by a foreign adversary, and it was part of a broader effort to counter a well-substantiated national security threat posed by the PRC (People's Republic of China)."
The decision is a complete win for the Justice Department and opponents of the Chinese-owned app and a devastating blow to ByteDance. The ruling now increases the possibility of an unprecedented ban in just six weeks on a social media app used by 170 million Americans.
There was no immediate comment from the Justice Department or TikTok on the decision.
The court acknowledged its decision would lead to TikTok's ban on Jan. 19 without an extension from Biden.
"Consequently, TikTok’s millions of users will need to find alternative media of communication," the court said, which was because of China's "hybrid commercial threat to U.S. national security, not to the U.S. Government, which engaged with TikTok through a multi-year process in an effort to find an alternative solution."
TikTok and ByteDance argue the law is unconstitutional and violates Americans' free speech rights. They call it "a radical departure from this country's tradition of championing an open Internet."
President-elect Donald Trump, who unsuccessfully tried to ban TikTok during his first term in 2020, said before the November elections he would not allow the ban on TikTok.
The law prohibits app stores like Apple (AAPL.O) and Alphabet's (GOOGL.O) Google from offering TikTok and bars internet hosting services from supporting TikTok unless ByteDance divests TikTok by the deadline.
U.S. officials have warned TikTok's management is beholden to the Chinese government, which could compel the company to share the data of its U.S. users.
TikTok has denied it has or ever would share U.S. user data, accusing American lawmakers in the lawsuit of advancing "speculative" concerns.
