TikTok’s service providers still risk billions in penalties for bringing it back online

No matter what TikTok says in its laudatory pop-up messages, President-elect Donald Trump cannot simply declare an extension of the TikTok ban deadline and protect American companies that support it from billions of dollars in fines.

Trump seems to want TikTok available for his inauguration on Monday, because “Americans deserve” to see the event. But TikTok is officially banned starting today until it sells to a non-Chinese company, and there’s no deal in sight. Flouting that ban could get Apple and Google’s app stores, as well as service providers Akamai and Oracle, dinged for potentially $850 billion in penalties. Despite all this, Trump has reportedly assured companies they won’t face these fines if they let TikTok keep operating. Now, the question is simple: will Trump-friendly companies risk breaking the law to make the president happy?

TikTok’s status has been uncertain since last night. President Joe Biden said he wouldn’t enforce the law on the last day of his presidency, but TikTok declared it would go dark anyway. App stores removed it in accordance with the law. Then, Trump promised he’d extend the deadline, telling companies they wouldn’t face penalties — and TikTok promptly came back online with a thank-you note to the President-elect. The problem is that it’s not clear Trump can do what he’s promised.

Congress passed a law directly demanding TikTok divest itself from parent company ByteDance or face a ban. It included an option for President Joe Biden to extend the deadline by 90 days if a deal was announced; Biden declined to use it. There are only a few options for TikTok to legally keep operating now. The app could be sold and come back under different ownership. Congress could pass a new law extending the deadline or ending the ban. Or Trump could try to extend it by certifying a deal to change TikTok’s ownership is in place — but unfortunately for him, he can’t simply sign an order saying a law no longer exists.

This puts companies in a legal bind. TikTok’s US service providers risk $5,000 in penalties per person who uses their service to access the app. The government told the Supreme Court it could be enforced up to five years later, so they could be penalized under a future president (or Trump himself).

Trump needs to take action in a way that convinces them this won’t happen. Perhaps his best option would be certifying to Congress that TikTok has agreed to sell, then attempting to trigger the 90-day extension Biden didn’t use. (It’s debatable whether this can be done after the ban kicks in, but legal experts say it’s at least possible to argue for it.) “To be clear, he would be lying” about the deal, says University of Minnesota Law School professor Alan Rozenshtein. “He’d be lying to Congress, and that would be Congress’ problem. But he would still have certified, and so until the court would declare that that certification is invalid, I think the companies would be safe.”

For now, however, Trump’s assurances that it’s safe to support TikTok are legally flimsy. TikTok began coming back online in the US mid-day Sunday, suggesting its service provider Oracle might be relying on Trump’s assurance on Truth Social that he’d delay the ban, though the company has not confirmed or commented. “This would suggest that a post on Truth Social is enough for some companies to proceed to voluntarily violate federal law,” says Bloomberg Intelligence litigation analyst Matt Schettenhelm. “That’s in an astonishing development in my view, if that’s what’s happening.”

If companies are breaking the law, they would likely have a strong due process defense given Trump’s promises not to enforce it, Schettenhelm says. But “anytime you’re voluntarily violating the federal law, you’re forcing yourself into a fight over the issue,” he says. “Yes, it’s probably a winnable fight, but when it’s a fight over $850 billion in exposure, it’s probably better to not have to get into that fight at all.”

Rozenshtein says the move could invite shareholder lawsuits — something that Senate Intelligence Committee Chair Tom Cotton (R-AR) warned of, even though Trump encouraged service providers to bring TikTok back online in time for his inauguration.

That said, Trump’s power could encourage some companies to take calculated risks. “It’s certainly in the interest of these companies to to curry favor with the new administration and I guess it’s conceivable that even $850 billion of liability exposure and even voluntarily violating a new federal law might be worth it to some companies,” Schettenhelm says. “But you would not typically think that’s a calculation that makes sense.”

If Trump tries to overrule Congress in a way that’s illegal, someone with standing to sue could challenge him in court. Who might this be? One option is TikTok users who supported the ban and fear the Chinese government getting their data. “Of course, the courts might say, ‘well, then don’t use TikTok,’” Rozenshtein points out. A competitor like Meta also might be able to bring a claim, he says. Or a service provider like Apple or Google could try to get a court to clarify their legal liability, without actually challenging the arrangement. But given tech companies’ attempts to avoid antagonizing Trump, that route seems unlikely.

If TikTok’s service providers really want legal cover, then short of a true qualified divestiture — which would take time to hash out, if China even agrees to sell the app — their best option is Congress. That still seems like a long shot, especially on short notice. But now that Senate Minority Leader Chuck Schumer (D-NY) endorses an extension, Schettenhelm says, “it starts to be conceivable that maybe Congress would agree to at least delay the ban or push it back. That would be the most legally sound way to do this.”