Investors file suit against Trump, Bondi over TikTok sale

by · UPI

March 5 (UPI) -- Two investors have filed suit against President Donald Trump and Attorney General Pam Bondi accusing them of ignoring the law in helping to facilitate the purchase of TikTok's American assets by Trump's allies.

The suit was filed in a Washington, D.C., federal court Thursday. It accuses Trump and Bondi of ignoring the law, passed by Congress, that required TikTok's parent company ByteDance to divest its holdings in the United States and instead helping his donors buy part of the company.

In April 2024, Congress passed the Protecting Americans from Foreign Adversary Controlled Applications Act, which was signed into law by President Joe Biden. It designated TikTok "a foreign adversary controlled application" and banned distribution, maintaining or providing Internet hosting services to such services. It forced the company to divest or the federal government would ban the app.

The measure was supported by lawmakers on both sides of the aisle, over concerns that the Chinese government would use TikTok for data collection or to push disinformation or propaganda. National security and cybersecurity experts agreed that the fear was reasonable.

Related

"By flouting the law so publicly, I think the president is trying to send a message that he is quite literally beyond the reach of the courts, beyond the reach of Congress, beyond the reach of the rule of law," Brendan Ballou, CEO at The Public Integrity Project, a new nonpartisan organization that is representing the two investors, told NPR. "And we want to make sure that he isn't."

The sale of TikTok was finalized in January, after Trump had extended the deadline four times, which was against the statute.

The complaint alleges that Trump: "Issued an executive order purportedly granting an extension for TikTok to find a domestic owner and directed his Attorney General not to enforce the law. In the subsequent months, President Trump issued four more extensions, all contrary to the plain text of the law, and all directing the Attorney General (also contrary to the statute) to conduct no investigation into the law's violation."

TikTok eventually sold a portion of its U.S. holdings to the newly created TikTok USDS Joint Venture.

The three managing investors are U.S. private equity firm Silver Lake Technology Management, U.S. tech giant Oracle and Abu Dhabi-based MGX Fund Management, each of which holds 15% of the venture. Dell Family Office investment firm, Vastmere Strategic Investments, Alpha Wave Partners, Susquehanna International Group, General Atlantic and several other investors complete the consortium. ByteDance owns 20% of the joint venture.

"Under the deal, TikTok's American assets would be acquired by companies including Oracle, MGX, Susquehanna International Group, and General Atlantic, each of which, directly or through their leaders, contributed millions to the President's political projects or invested billions in his personal businesses. These companies acquired TikTok at a price so low that one analyst called the deal "daylight robbery," the complaint alleges.

"I am so happy to have helped in saving TikTok!" Trump wrote on social media in January. He called it a "very dramatic, final, and beautiful conclusion" to the deal.

The two plaintiffs in the case are Zhaocheng Anthony Tan, a software engineer who owns stock in Alphabet Inc., Google's parent company, and Garrett Reid, a software engineer who owns stock in Meta Platforms Inc.

The complaint says that Alphabet and Meta stock rose when the law was passed and when the court affirmed the law, but dropped when Trump announced the sale, harming the plaintiffs.

The suit also alleges that the deal is in violation of the law. Under the Protecting Americans from Foreign Adversary Controlled Applications Act, "ByteDance cannot have an ongoing 'operational relationship' with TikTok's severed American operations."

But the deal allowed ByteDance to keep the app's recommendation algorithm and license it to a new American TikTok entity, which would operate its "e-commerce, marketing, and advertising operations. And the CEO of TikTok's global operations, which is still owned by ByteDance, would even sit on the new American entity's board," the suit alleges.

"For the law to mean something, it must be followed, even -- perhaps especially -- by the President," the suit says. "Respondents have violated the statute and subverted the will of Congress. Petitioners bring this case to ensure that such violations, and such subversion, do not continue."