February 5, 2025 • 39 mins
In this episode, lawyer Richard Hoeg explores the prospect of Microsoft/TikTok acquisition talks. He examines the TikTok ban, enforcement challenges, and network impacts. Hoeg analyzes the performative aspects of January 19th, discusses bills of attainder, and the courts' decisions on both attainder and First Amendment law. He critiques the court's reasoning, discusses TikTok's business restrictions, and debates divestiture versus confiscation. Richard also touches on the Trump administration's actions, Congressional provisions, First Amendment concerns, and the Supreme Court's role. The episode concludes with insights into Microsoft's negotiation strategy and political considerations.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:14):
Hello, and welcome to another episode ofVirtual Legality.
I'm your host, Richard Hogue, managing memberof the Hogue Law Business Law Firm of
Northville, Michigan.
And today, as you can see on your screen, we'regonna talk about virtual legality fan favorite,
Microsoft.
And in this particular Reuters article, thefact that president Trump has said that
Microsoft is in talks to acquire TikTok.
(00:36):
Now I have some reservations about this story,some concerns about the way it's been reported
in the various places I have seen online, andthat's the reason that I've made this video
today.
But before we can get to that, let's see whatthe reporting actually says.
1st, Reuters says US president Donald Trumptold reporters on Monday, so this is about a
week ago, that Microsoft is in talks to acquireTikTok, and that he would like to see a bidding
(01:02):
war over the app.
Microsoft declined to comment, which isn't abig surprise for these big corporations.
They don't love to comment on these things, butit is worth noting that Microsoft itself has
not said it's interested in buying TikTok as ofthis point in time.
We basically have a statement from presidentTrump to reporters that Microsoft is
interested, and we're gonna talk about why thatmight be in president Trump's best interest
(01:27):
over Microsoft's.
TikTok, continues the article, which has abouta 170,000,000 American users, was briefly taken
offline just before a law requiring its Chineseowner, ByteDance, to either sell it on national
security grounds or face a ban took effect onJanuary 19th.
And that's only one sentence of this article,but it really is the most important piece of
(01:48):
this entire story, and there's a lot to unpackthere.
So let's talk about that law, the ban, and whatpresident Trump has done about it.
So looking at the law, we see it's called theProtecting Americans from Foreign Adversary
Controlled Applications Act, which really justrolls right off the tongue.
We're gonna call it the TikTok ban probably infurther references in this video.
(02:10):
But suffice to say, what it does is prohibitthe support mechanisms for an application that
is made by a foreign adversary.
Right?
So in this particular case, China, throughByteDance, is deemed to control the TikTok
application, and this law says it shall beunlawful for an entity to distribute, maintain,
(02:30):
or update a foreign adversary controlledapplication by carrying out in the United
States services to distribute, maintain, orupdate such controlled application by means of
a marketplace, etcetera, providing Internethosting services to enable the distribution
maintenance or updating of such foreigncontrolled application.
So what we saw on January 19th this past yearis a ban that took effect primarily through the
(02:55):
network infrastructure that supports TikTok.
You saw it from the App Store.
You saw it from, the various places that youmight otherwise access TikTok through your
iPad, your phone, or otherwise.
And they said we are taking it down.
Why?
Because the penalties for this are prettyextreme.
The enforcement of civil penalties for thisparticular law are that an entity that violates
(03:18):
subsection a, and again, we're talking aboutApple.
We're talking about Google here.
We're talking about infrastructure support forwhat is deemed to be one of these evil
applications like TikTok, shall be subject to acivil penalty in an amount not to exceed the
amount of results from multiplying $5,000 bythe number of users within the United States
determined to have access, maintained, orupdated the foreign adversary controlled
(03:41):
application as a result of such violation.
So one of the reasons you saw this ban go intoeffect immediately on the date shifting over to
January 19th was that Apple and other networkinfrastructure providers looked at this and
said, well, that's a lot of money.
You talk about a 170,000,000 potential Americanusers for this application, $5,000 per user.
We don't know if this is gonna get enforcedbecause it wasn't enforced by the Biden
(04:04):
administration on its last day in office.
Trump had already signaled that he was unlikelyto enforce it on his 1st day and on in office,
and we'll see that he is in fact not enforcingit right now as part of this video.
But those on the outside looking in that aren'tin control of the White House, don't know
what's gonna happen, say it's better to be safethan sorry, and we are not going to allow you
(04:24):
to access TikTok because we don't wanna getnailed by all these huge penalties for
otherwise providing it to you.
Now the other aspect of that is it isperformative in some respects.
If you don't like that this law was put intoeffect, if you don't like that this ban exists,
it does appear that ByteDance, TikTok, andother companies in the ByteDance family had a
significant desire to show you how much painwould be inflicted upon you if you're an
(04:48):
American citizen by virtue of this law.
And so on that particular morning, a lot ofstuff went down.
A lot of stuff was taken offline, includingthings that were clearly not designed to be hit
by this particular act, like the Marvel Snapcard game on your phone.
But you can also be sympathetic with thoseproviders and say, hey.
Look.
This law was just written this past year.
(05:09):
We don't know what's gonna happen from here onout.
This is a lot of money for us to play with.
It's our fiduciary duty to our shareholders tonot play with that money if we can otherwise
just knock down access, and so that's what wesaw that morning.
But you might also remember that the last timeI talked to you about this particular topic in
TikTok versus the US, I said I didn't thinkthat this law was likely to survive because I
(05:32):
thought it was a bill of attainder, anunconstitutional bill of attainder on under
United States law.
And if we aren't familiar with that term, Idon't blame you.
But a bill of attainder is described by theCornell Law School in their kind of treatise
piece here says, it's a piece of legislationthat declares a party guilty of a crime.
Bills of attainder allow the government topunish a party for a perceived crime without
(05:54):
first going through the trial process.
In the United States, bills of attainder areunconstitutional.
The constitutional ban on bills of attainderworks to uphold separation of powers by
preventing Congress from suing the functions ofthe judicial branch.
Right?
We have these three branches of government.
We have the Congress that writes the laws.
We have the executive, the president, that seesthem enforced, and then we have the judicial
(06:17):
branch, the court system, that says what thelaw means and in a criminal kind of proceeding,
says whether or not someone is guilty ofviolating a law.
Judges.
Right?
That's what judicial means.
That's where judgment comes in hand.
And if congress can just say, alright.
All murders are illegal.
That's fine.
But if they also say, and we determine that Bobis guilty of a murder, and so he gets all the
(06:40):
penalties without a court of, of appeals,without a trial process, without any due
process under the constitution, then we've gota problem.
And if we look at this particular law, we seewhat it applies to.
A foreign adversary controlled applicationmeans any of these technological applications
by any of ByteDance, TikTok, a subsidiary ofByteDance or TikTok, an entity controlled or
(07:05):
owned by ByteDance or TikTok, or moregenerally, a covered company that is controlled
by a foreign adversary as determined by thepresident to present a significant threat to
the national security of the United States.
So what is happening in this law is thatthey've made the no murders provision here.
You are a covered company if the executivedetermines that you present a significant
threat, and you give public notice, you make apublic report to Congress, you do these various
(07:29):
other things under the law, But also, we aredetermining on its face that ByteDance and
TikTok would fall under these categories, andyou don't get a say in it, mister executive.
And so I had said that I felt that this was abill of attainder, but as I often say in the
space, reasonable minds can differ, and thereasonable minds on the US District Court that
(07:51):
saw the first version of this case said, no.
It's not a bill of attainder.
Now I disagree with this provision.
We're gonna talk about it as part of thisvideo, but I disagree with this argumentation,
and I'll talk about why.
They describe the argument that TikTok makes asfollows.
TikTok claims the act is a bill of attainderand therefore prohibited by the constitution.
The government responds that the bill ofattainder clause does not apply to
(08:12):
corporations, and that in any event, the actdoes not constitute a legislative legislative
punishment.
We agree that the act is not a bill ofattainder, and that's how these decisions are
always written.
We tell you upfront what we decided, but thenwe're gonna explain our reasoning.
A law is a bill of attainder if it, 1, applieswith specificity, and 2, imposes punishment.
(08:33):
Well, it's pretty clear that this applies withspecificity.
We're not even gonna see them discuss thatbecause TikTok and ByteDance are named right in
the law.
So the question must be, does this law imposepunishment?
It says you cannot support this application.
If you do, you're gonna be fined to death.
So you we're we're effectively going to banaccess to this application in the United
(08:54):
States.
Is that a punishment for purposes of thisargument?
Because the act applies with specificity,that's all the court's gonna say about it, this
claim turns on whether the act can be fairlydeemed a punishment.
We conclude essentially that it does not.
Before turning to the tests, however, webriefly address the government's threshold
argument that the bill of attainder clause doesnot apply to corporations.
This is a silly argument.
When you are prosecuting a case like this ordefending a case like this, you throw out all
(09:17):
the arguments you can very often.
So the strongest one, whatever the court deemsto be the strongest, is on the wall as being
thrown out by you because you don't know whatis going to actually work for them.
But the US government saying corporationscannot be subject to a bill of attainder was
really never gonna play.
In other cases, as this court says, we haveassumed without deciding that the clause
(09:39):
applies to corporations, but emphasize thedifferences between commercial entities and
persons need to be considered.
We take the same approach here.
To determine whether a law constitutes apunishment, we analyze whether the challenge
statute falls within the historical meaning oflegislative punishment, the historical test,
whether the statute viewed in terms of the typeand severity of burdens imposed reasonably can
(10:00):
be said to further non punitive legislativepurposes, the functional test, and whether the
legislative record evinces a congressionalintent to punish the motivational test.
So they've got these three tests.
If you look at this, say, where is this in thelaw?
Where is this in the constitution?
The answer is it isn't in there.
If you go to law school, you'll see a lot ofthese things happening from the court side, but
the court makes a lot of rules and and kind ofrubrics that they determine these things on.
(10:25):
They make tests like this, then say this iswhat we're gonna decide it based on, and that's
how our presidential system works in the UnitedStates.
It's maybe not the cleanest way to evaluatethings like constitutional questions, but it is
the way that we do it.
So they adopt this test.
It's adopted years years ago.
It's the precedent the court will follow, andthey say this isn't going to fall under any of
(10:47):
these particular categories.
Now I look at this and say this sure seems likeyou are preventing me from conducting business
that I want to conduct as TikTok, as ByteDance,and that's a punishment by any reasonable
understanding of what would be a legislativepunishment.
Right?
It's not the death penalty for a murderer.
It's not that kind of thing because we'retalking about corporate forms here, but it is a
(11:10):
punishment.
The court, however, does not agree.
TikTok contends the act satisfies thehistorical test because it bars TikTok from its
chosen business.
TikTok reasons the provisions of the act areclose analogs to 2 categories of legislative
action historically regarded as bills ofattainder, confiscation of property, and
legislative bars to participation in a specificemployment or profession.
(11:30):
Yes.
They are accusing the US government ofessentially extorting them to lose their
business, lose their assets by virtue of thisparticular law.
According to TikTok, the act effectivelyrequires TikTok to relinquish its property or
see it rendered useless, and it precludesTikTok from continuing to participate in
legitimate business enterprise.
As already explained, however, the act requiresa divestiture That is a sale, not a
(11:52):
confiscation, as a condition of continuing tooperate in the United States.
And I find this argument to be wanting,politely.
If I were to come up to your house and say, youhave to sell this house right now, then you
would not be otherwise, limited in your abilityto claim that I was extorting you, that I was
trying to steal the value of your house in someimportant way just by the fact that I'm not
(12:17):
personally stealing the house from you, nottaking the money from you, that you're getting
it from another person.
Everybody knows that if you are forced to sellwhen you don't want to, you're gonna get lower
value for what your asset is in the marketbecause you aren't deciding when you are
receiving enough value to actually give up yourasset, whether that's your house or your
business.
And so I think that this, it's just adivestiture, not a confiscation, is a very
(12:42):
limited kind of argument to be made by thecourt.
But they find it compelling, and I am not ajudge in the district court.
I'm not a judge in the Court of Appeals or theSupreme Court, so I'm just a guy here talking
on YouTube.
I'm just telling you that I don't find thisargument to be very effective.
The court did.
The closer historical analog to the act is aline of business restriction, which does not
(13:03):
come within the horse historical meaning of alegislative punishment, and they have some
precedence on that.
The bill of attainder clause tolerates statutesthat in pursuit of legitimate goals such as
public safety or economic regulation, preventcompanies from engaging in particular kinds of
business or particular combinations of businessendeavors.
And so they say, essentially, this is anownership kind of complaint.
(13:26):
We are allowed to regulate who owns you.
We are unhappy with the fact that China ownsyou, so this is not a bill of attainder.
It's not a punishment on those grounds.
They also pass the functional test, basically,that they are not specifically just trying to
punish you.
They're trying to accomplish something else.
In this case, they're trying to accomplishnational security or data protection, And
because we're also going to find as part ofthis decision that they meet strict scrutiny
(13:50):
standards for first amendment complaints, weare obviously going to find that this passes
the functional test here.
Finally, they say that we can't use themotivational test because given the obvious
restraints on the usefulness of legislativehistory, congressional intent to punish is
difficult to establish.
Indeed, the motivational test is notdeterminative in the absence of unmistakable
(14:11):
evidence of punitive intent.
So the court says we're throwing our hands upon your motivations to pass this law because we
can't possibly know that.
Now one might ask the question based on thislanguage, how did this become part of the test
as it stands?
The court is not going to answer that for us,but suffice it to say, they're gonna say that
this particular law, which prohibits anybodyfrom helping TikTok, as named in this
(14:34):
particular law despite the fact that thepresident has not separately found them to be a
security concern because Congress has to not bea bill of attainder.
I disagree with that argument, but that's howit was decided before it headed up to the
Supreme Court.
And if you follow the TikTok story, you knowthat the Supreme Court did not otherwise
(14:55):
declare this law to be unconstitutional either.
And in so doing, they did it on the basis of itnot violating the First Amendment.
Now I thought the First Amendment claim wasalready a weak one because this particular law
was not strictly aimed specifically at thespeech of TikTok, the speech of ByteDance, the
speech of any of these companies that mightotherwise fall under this act's purview, but
(15:17):
instead was particularly focused on theownership kind of consideration.
That's different from it being a bill ofattainder.
That's different from naming TikTok andByteDance.
But I always thought this was a weak argument,but it's important to know from our legal
perspective that the bill of attainderargument, those arguments that I thought were
the strongest, did not make it up past theappeals court level.
You have to pick your battles when you'reasking the Supreme Court to look at your
(15:40):
questions, and the Supreme Court was alwaysgonna be more compelled by a first amendment
consideration.
So that's what TikTok brought before it, andthe Supreme Court did not, in deciding that
this law was constitutional, otherwise opine onthe bill of attainder or takings clause
arguments that TikTok brought before the lowercourts.
I also wanted to read for you just a little bitof the history of this particular case because
(16:01):
I think it's interesting in respect topresident Trump, which is going to be a major
factor in the rest of this conversation.
In recent years, says the Supreme Court of theUnited States, US government officials have
taken repeated actions to address nationalsecurity concerns regarding the relationship
between China and TikTok.
In August of 2020, president Trump issued anexecutive order finding that the spread in the
(16:22):
United States of mobile applications developedand owned by companies in China continues to
threaten the national security, foreign policy,and economy of the United States.
President Trump determined that TikTok raisedparticular concerns noting that the platform
automatically captures vast swaths ofinformation from its users and is susceptible
to being used to further the interests of theChinese government.
(16:43):
The president invokes his authority under theInternational Emergency Economic Powers Act,
IIPA.
You've heard me reference that in respect toTencent and virtual reality very recently, as
well as in other context for both this Trumpexecutive order we're discussing right here and
in the past, IIPA and the National EmergenciesAct to prohibit certain transactions involving
ByteDance or its subsidiaries as identified bythe Secretary of Commerce.
(17:06):
The secretary published a list of prohibitedtransactions in September 2020.
Federal courts enjoined the prohibitions beforethey took effect, finding that they exceeded
the executive branch's authority under IIPA.
Just days after issuing his initial executiveorder, president Trump ordered ByteDance
Limited to divest all interests and rights inany property used to enable or support
(17:26):
ByteDance's operation of the TikTok applicationin the United States along with any data
obtained or derived from US TikTok users.
ByteDance and TikTok filed suit in the DCCircuit challenging the constitutionality of
the order in February of 2021.
The DC Circuit placed the case in abeyance topermit the Biden administration to review the
matter and to enable the parties to negotiate anondivestiture remedy that would address the
(17:47):
government's national security concerns.
You might remember all of this, but I thinkit's a useful summary of what happened with
respect to TikTok.
Throughout 2021 and 2022, the Bidenadministration, ByteDance negotiated with
executive branch officials to develop anational security agreement that would resolve
these concerns.
Executive branch officials ultimatelydetermined, however, that ByteDance proposed
agreement did not adequately mitigate the risksposed to US national security interests.
(18:10):
Negotiation stalled and the parties neverfinalized the agreement.
Against this backdrop, congress enacted theprotecting Americans from foreign Adversary
Controlled Applications Act, and the act makesit unlawful for an entity to provide certain
services to distribute, maintain, or update anan application like TikTok.
Entities that violate this prohibition aresubject to civil enforcement and hefty monetary
penalties.
(18:31):
The act provides two means by which anapplication may be designated an application of
this sort.
First, the act expressly designates anyapplication that is operated by ByteDance or
TikTok or any subsidiary thereof.
2nd, the act establishes a general designationframework for any application that is operated
by a covered company, controlled by a foreignadversary, and determined by the president to
present a significant threat.
(18:53):
In broad terms, the act defines covered companyto include a company that operates an
application that enables users to generate,share, and view content, and is more than a
1000000 monthly active users, and excludes fromthe definition a company that operates an
application whose primary purpose is to allowusers to post product reviews, business
reviews, or travel informational reviews.
And this particular aspect is one of the waysthat TikTok tried to fight this law to say that
(19:13):
it was content focused.
The worst thing that you can do under the FirstAmendment in the United States is pass a law
that specifically prohibits a given type ofcontent.
Right?
You aren't allowed to pass a law that says,thou shall not say good things about the
country of China.
Thou shall not say good things about theMicrosoft Corporation or bad things.
(19:35):
Either way, you can't speak specifically to thecontent.
You have to do these facially neutral kind oflaws.
And in this case, Congress has aimed itspecifically at the company on the notion, at
least in some of the legislative record, thatthey aren't happy with some of the stories and
the way the algorithm works for TikTok orByteDance, but on a security basis that they
aren't happy with the way that China controlsaccess to the algorithm and could easily change
(19:58):
it tomorrow to be even worse than it is rightnow.
The axe prohibitions take effect 270 days afteran application is designated a foreign
adversary controlled application, and that datethat that it took effect is January 19, 2025, a
day after this opinion is actually written bythe Supreme Court.
The act exempts a foreign adversary controlledapplication from the provisions if the
(20:19):
application undergoes a qualified divestiture.
We'll talk about that more in just a minute,but there are ways in which you can get out of
the operation of this act if you are sellingyour company.
That was the design that was hopefully from thecongressional standpoint to get ByteDance and
TikTok to sell their interests in theapplication and more specifically the algorithm
(20:39):
so that there wouldn't be this security concernhanging over congress's head.
And in this particular decision, the SupremeCourt ultimately determines that the First
Amendment isn't implicated.
The law goes into effect, and then, well, itstops being into effect.
From backing a ban to being hailed as a savior.
(21:02):
Inside Trump's TikTok shift is reported by theAssociated Press few weeks ago now, January 19,
2025.
During his first term as president, as we justheard described by the Supreme Court, Donald
Trump led the effort to ban TikTok, the hugelypopular video sharing site he said posed a
threat to US national security.
But on the eve of his return to the WhiteHouse, the president-elect is being hailed as
(21:23):
the app savior.
After going dark for users this weekend, Trumpsaid on his social media site that he would
issue an executive order after he sworn in fora second term on Monday, delaying a TikTok ban
so that we can make a deal to protect ournational security.
Thanks for your patience and support, read theannouncement from TikTok.
As a result of president Trump's efforts,TikTok is back on in the US.
(21:43):
So if you were on TikTok, you were otherwisefollowing this story on social media on January
19th this year, you saw it be taken down.
You saw Apple restrict access to TikTok, andthen you saw a note from TikTok saying we're
back, thanks to president Trump.
And that's part and policy of politics.
Right?
That's what president Trump is trying toachieve here, but it was an interesting
question for folks looking at this particularstory.
(22:06):
That's what happened on 19th.
And then as promised on 20th, as NPR reportshere, Trump signs an executive order to pause
TikTok ban and provide immunity to tech firms.
Now we don't have to take NPR's word for it.
We can actually look at the order itself, andthat order is called the application of
protecting Americans from foreign adversarycontrolled applications act to TikTok.
(22:29):
Now that's an interesting really long form wayof describing this since the act itself
includes TikTok in its language.
But suffice to say this order, which is anorder of the executive branch, it's the
president saying this is what I would like myexecutive branch, my agencies, my people to do
with respect to this law, says the following.
The act regulates foreign adversary controlledapplications, specifically those operated by
(22:52):
TikTok and any other subsidiary of its Chinabased parent company, ByteDance, on national
security grounds.
Section 2 a of the act prohibits entities fromdistributing, maintaining, or updating certain
defined foreign adversary controlledapplications within the territory.
We talked about this.
Under section 2 a of the act, the provisionstake place and become effective on January 19,
2025.
(23:12):
President Trump says I have the uniqueconstitutional responsibility for the national
security of the United States, the conduct offoreign policy, and other vital executive
functions.
So here you can see what he's trying to do inthis particular order is say, the executive is
vested with the control of foreign relations,and so I'm going to claim that authority in
this document.
To fulfill those responsibilities, I intend toconsult with my advisers, including the heads
(23:34):
of relevant departments and agencies on thenational security concerns posed by TikTok and
to pursue a resolution that protects nationalsecurity while saving a platform used by a
170,000,000 Americans.
My administration must also review sensitiveintelligence related to those concerns and
evaluate the sufficiency of mitigation measuresTikTok has taken to date.
The unfortunate timing of section 2 a of theact, one day before I took office as the 47th
(23:57):
president of the United States, interferes withmy ability to assess the national security and
foreign policy implications of the act'sprohibitions before they take effect.
Now understand, the law does not have a rolefor the president in deciding whether or not an
application run by ByteDance or TikTok fallsunder this category.
Remember, they are named parties in this law.
(24:18):
So this is already kind of stealing a base thatthe president is doing right here.
That's gonna be part of this story as wecontinue through it with this video.
This timing also interferes with my ability tonegotiate a resolution to avoid an abrupt
shutdown of TikTok platform while addressingnational security concerns.
Accordingly, I'm instructing the attorneygeneral not to take any action to enforce the
(24:38):
act for a period of 75 days from today.
I hereby order the attorney general not to takeany action on behalf of the United States to
enforce the act for 75 days from the date ofthis order to permit my administration an
opportunity to determine the appropriate courseof action with respect to TikTok.
During this period, the Department of Justice,that's an executive branch agency, shall take
no action to enforce the act or impose anypenalties against any entity for any
(25:02):
noncompliance with the act.
So we've got a law.
It's on the books.
It's written by Congress.
It's signed by the president.
It is upheld by the Supreme Court, and the newadministration, the new president comes in and
says, I'm not going to enforce that law for atime, not because I think it's
unconstitutional, but because I don't feel likeI have a good understanding of this particular
situation, and so I'm not gonna enforce.
I'm gonna tell my attorney general not toenforce it.
(25:25):
The problem with that, as president Trump hasundoubtedly already become aware, is that he
takes an oath to defend the constitution, andpart of the presidential powers are that he
shall take care that the laws be facefaithfully executed.
This is the take care clause if you've everread the US constitution.
This is what the president does.
(25:46):
I just described the legislative as writing thelaws and the president as executing them or
enforcing them.
The president is supposed to enforce basicallyevery law, and this is an argument.
This is a discussion about what that means inpractice as written by the constitution center.
I'm not gonna take a policy position on thisone way or the other, but you can see that
there's a lot of debate as to what thisparticular clause, very short but very
(26:09):
important, means in practice.
At the same time, the provision serves as amajor limitation on his power because it
underscores the executive is under a duty tofaithfully execute the laws of congress and not
disregard them.
At a minimum, the clause means that thepresident may neither breach federal law nor
order his or her subordinates to do so, fordefiance cannot be considered faithful
(26:31):
execution.
So if we look at the law, we see that theenforcement mechanism is the attorney general
finding there to be a problem and imposing thefines that are set forth in the law.
The president has within his branch, theattorney general in the Department of Justice,
he tells him not to do that.
Is that faithful execution of the laws?
I certainly have questions there.
But the clause raises a number of vexingquestions.
(26:53):
For instance, must the president enforce thoselaws he or she believes to be unconstitutional?
Some scholars argue the president must enforceall congressional laws without regard to his or
her own constitutional opinions.
I would disagree with that very significantly.
As I just said, the president and Congress bothhave to take oaths to defend the constitution,
and Congress shouldn't be passingunconstitutional laws, but the president
(27:13):
shouldn't be enforcing them if he believes inthe unconstitutional.
Now in this particular case, the Supreme Courthas held that this law is not a violation of
the First Amendment.
Could be a violation of something else notraised before the Supreme Court.
Either way, it's determined to beconstitutional for purposes of legal argument
right this second, so the president reallydoesn't have those grounds to stand on.
There's also the related question of whetherthe president must honor statutes that purport
(27:34):
to limit his or her authority over lawexecution.
Can Congress decree by statute that thepresident must allow others to implement
certain statutes without regard to presidentialsupervision or oversight?
Now we see in the definition in this law thatmost of the categories of who could be impacted
by this law are to be determined by thepresident or his branch in general through
(27:56):
interagency discussion, except for applicationsthat are made by TikTok or ByteDance.
So I think there is an argument here that atleast says that Congress is trying to usurp the
power of execution, the power of the presidencyby including as maybe not a bill of attainder,
but a named party in this particular lawoutside of the broad ambit of who is otherwise
(28:18):
gonna be impacted by it, but that isn't raisingthe executive order either.
Finally, the sweep of contemporary federal lawensures that federal law enforcers have
tremendous enforcement discretion, and this isreally what comes up most in the modern
presidential era.
In particular, resource constraints coupledwith numerous violations often preclude a
policy of total enforcement.
Said another way, we have so many laws on thebooks and so much that the president or the
(28:42):
attorney general or the Department of Justiceor the FTC or the SEC or whoever you're
thinking of could enforce that there is nopossible way that they could enforce every
violation against every violator.
So there's already some amount of discretionthat is within the executive branch because
they don't have the resources to imposepenalties or other impacts on every violator of
(29:02):
federal laws.
Now you can argue that's not a great place tobe.
I would certainly be sympathetic to thatargument, but it does mean that even with the
take care clause in effect, the executivebranch and the presidency in particular has the
right to make certain policy determinations asto where the resources should go, what laws
need to be most enforced over others, what wemight call, if you're familiar with sports
(29:25):
terms in the United States, a point ofemphasis.
We are going to instruct our agencies orwhatever aspects of the executive branch are
implicated to focus on these particular laws,these particular violations, and put our money
and our resources there, and that might causeother laws to go by the wayside, but that's the
purview of the executive branch.
None of that is implicated here, but it'simportant to understand that that's a problem
(29:48):
for president Trump because the law actuallydoes have a concept of penalties, who enforces
them, the attorney general as we justdiscussed, and what you might do to extend the
time frame of the ban to give more time forTikTok and ByteDance to operate.
And that is to say congress said, with respectto a foreign adversary controlled application,
(30:10):
TikTok, the president may grant a one timeextension of not more than 90 days with respect
to the date on which this subsection wouldotherwise apply if the president certifies to
congress that a, a path to executing aqualified divestiture, a sale, has been
identified with respect to such application, b,evidence of significant progress towards
(30:30):
executing such qualified divestiture has beenproduced with respect to such application, and
so all of these need to apply.
He needs to certify all of this to congressthat there are in place the relevant binding
legal agreements to enable execution of suchqualified divestiture during the period of such
extension.
So Congress has said, alright.
There might be an issue with this timing.
We understand this might come up, misterpresident.
(30:52):
You get one time to extend it for 90 days.
And if you decide to extend it for 90 days,then you have to certify to us.
You need to make a report to us that all thesethings are in place, that you're on your way to
a sale, that there is significant progresstowards that sale, and that we can enter into a
closing document.
We can actually execute this sale within the 90days that we are willing to extend this time
(31:15):
frame of.
But you might recall, in that executive order,we didn't see a 90 day time frame.
We saw a 75 day time frame.
That's outside the purview of the law entirely,and it is in respect to the attorney general
not enforcing these particular penaltyprovisions.
Nothing to do with whether there's a qualifieddivestiture, which leads us to Trump's problem.
Can Trump put a pause on the TikTok ban?
(31:36):
Or as the Associated Press says, since anextension on a ban can only occur if
significant progress has been made towards asale, it's possible that Trump's order could
face legal challenges.
In fact, we would anticipate it.
On Sunday, senator Tom Cotton of Arkansasposted a message on x listing a number of state
and federal agencies and private entities thatmight be willing to go to court to get the ban
enforced.
However, it's unclear if anyone is planning tochallenge Trump's order.
(31:59):
One thing that happens in the law, and I knowwe talk about it a lot in virtual reality on a
real politic basis, is that if no one's willingto fight over this, chances are you can do
whatever you want from a government role.
If you're not going to challenge a law asunconstitutional, Congress can pass that law,
can enforce that law, and if it's notchallenged, then the court doesn't get to say
anything on it.
In this particular case, if you sign anexecutive order and there's an a legal problem
(32:21):
that nobody decides to challenge, we'll neverknow if there was a real legal problem because
nobody decided to challenge it.
So we don't know whether it would bechallenged, but if somebody wanted to challenge
it, it would be on the basis that Trump doesnot have the ability to just say no.
I'm just gonna ignore that law entirely.
I'm gonna tell my entire, branch to ignore thatlaw for a period of time that was designated by
me outside of any of the times stated in thelaw.
(32:44):
And if you do challenge me, chances are whatyou're going to say is that you have to prove
that we are moving close to a sale.
So as I just mentioned, Trump brushes off TicTac National Security concerns while calling
for a 50% deal as reported by the ABC News is afunction of that particular conversation.
(33:04):
It's Trump, outside of his executive order,trying to say that he's still acting within the
purview of the law, because to do otherwisewould be to violate his his constitutional
oath.
Or as he says in the quote in this article,TikTok is worthless.
Worthless if I don't approve it.
It has to close.
I learned that from the people that own it.
If I don't do the deal, it's worthless.
(33:24):
Worth noting, if I do the deal, it's worthmaybe a $1,000,000,000,000.
A trillion, Trump said.
He continued to argue that there should be atleast 50% US ownership of the app, although he
didn't make mention of the national securitythat prompted the app's ban in the 1st place.
Trump notably called for a ban on the app dueto national security during his first term.
If I do the deal for the United States, then Ithink we should get half.
(33:44):
In other words, wait.
I think the US should be entitled to get halfof TikTok.
And congratulations, TikTok has a good partner,and that would be worth, you know, could be
500,000,000,000 US dollars or something.
And, again, if you look at these quotes andthink, wow.
This sounds like a shakedown.
This sounds like a US government extortionscheme on whatever the asset value of TikTok
is.
I'm not going to blame you.
But as part of this story, Trump's got aproblem.
(34:07):
Trump thinks TikTok is worth something.
Trump thinks that if they're gonna legallychallenge him on this executive order that he
needs to have somebody ready to buy the companyor at least willing to say that they could buy
the company, you wind up with an article likethis one or a statement from Trump like this
one that says Microsoft is in talks to acquireTikTok.
Right?
So my supposition here, and, again, it's justthat, it's just speculation on my part, is that
(34:29):
Microsoft is one of the few companies in theUnited States, indeed, it's one of the few
companies on earth that could plausibly say atthe level that Trump is talking about, that we
have the cash or other assets that we couldpurchase this particular company.
And as part of that $3,070,000,000,000 marketcapitalization, they can also be obsequious to
(34:52):
the new incoming administration.
We know from our experience with the MicrosoftCorporation covering it in this context and
just watching it in the news and otherwise thatthey have as their chosen political approach in
things like regulatory review of deals thatthey have made in video games and otherwise in
the past, that they want to be as positive aspossible towards the governments that are
(35:15):
regulating them.
They do not wanna be seen as an antagonist.
They wanna be seen as a fellow traveler tothese particular governments, and that is well
within their rights as a corporation orotherwise to do, but we know this about them.
And if you're president Trump and you'relooking at a potential legal challenge for this
particular issue, you don't wanna lose that,then it behooves you to suggest that one of the
few companies that could actually buy anapplication the size of TikTok is willing to do
(35:40):
so, if that company is otherwise as obsequiousas they are.
And this is an article that I pulled up that Iwas doing while I was reviewing this, video
that says from Microsoft on AI that as we usherin a new year, we will welcome a new president
into the White House as well as a goldenopportunity for American technology and
economic competitiveness.
And again, this is not a political statementhere.
(36:01):
This is not super unusual for corporations totake this approach, but it is worth noting that
Microsoft, this huge multi $1,000,000,000,000corporation has throughout all of these
conversations we've had in virtual reality nowfor years, taken the tact that we are going to
buddy up with whatever the administration isdoing at that point in time in the United
States history.
And so it it makes all the sense in the worldto me looking at this particular issue that
(36:24):
when they say things like in sum, as we look tothem 4 years ahead, there are many reasons to
be optimistic that they are a chosen vesselthrough which president Trump and his
administration can say, look, we're movingforward with a potential TikTok sale.
If anybody wants to challenge me on this, I candefend, not just because he might be able to do
that because Microsoft actually is engaged inthese conversations, but also to actually knock
(36:46):
down the possibility of people challenging himon the legal grounds we just talked about.
Because if there is somebody that couldpotentially buy this company within the next 90
days, then that legal challenge is likely tofail in any event.
So people asked me to talk about thisparticular story.
I saw it in the news a couple of days ago, andthe very first thing I thought was that
Microsoft in particular and Brad Smith, theirVP of government relations specifically, is in
(37:12):
the business of buddying up to administrations,is in the business of making friends with
governments for purposes of benefiting theMicrosoft Corporation and being able to use the
Microsoft name.
I don't think president Trump would have doneit without permission.
It's useful to him for purposes of thisparticular conversation.
So I wanted to frame that for you in that wayas part of this talk because I think TikTok is
one of the biggest, most interesting stories ofthe year.
(37:34):
I think Microsoft is always interesting andworth talking about because they are so big and
have their hands in so many pies in the UnitedStates and globally, but also because I thought
there was a lot of misinformation out there inthe world and that it is more useful to go
through the source material, look at the laws,look at what's actually being demanded of the
presidents, what the executive order actuallysays, and how Microsoft can play a part in this
(37:56):
particular story with you all today.
Now that's virtual reality for today.
If you like this video, if you wanna supportthe channel financially or otherwise, please
consider becoming a member of the channel.
We're gonna do more membership, early videoslike this one, super chats on live videos.
Patreon, you might notice if you've been here anumber of times that I have removed player and
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(38:21):
activities after my stroke a couple of yearsago, I've determined that I am incapable or
unable to actually support both platforms atonce.
So if you do support us on player right now,please consider coming over to Patreon or
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Otherwise, nobody should feel obligated tosupport us financially at all.
I appreciate every little bit of help whetherthat comes as financial support or just
(38:43):
subscriptions, up votes, comments.
I try to respond to as many comments as I canon this channel or just telling your friends
that we're having conversations like this one.
If you find them helpful, if you find themuseful, informative, educational, entertaining,
what have you, tell your friends we love tohave people here.
I love to have the community talking aboutthese particular issues so that we can have
good reasonable conversations about things thatmight be very, very different approaches from
(39:07):
different people, in our comments.
I very much appreciate all of that support.
Otherwise, those questions and comments areones that I see very, very often, and I try to
respond as much as I possibly can.
Virtual Legality is a YouTube video series withaudio podcast versions presented as commentary
and for education and entertainment purposesonly.
(39:28):
It does not constitute legal advice and doesnot create an attorney client relationship.
If you have legal questions about the topicsdiscussed, please consult your own legal
counsel.
Hello, and welcome to another episode ofVirtual Legality.
I'm your host, Richard Hogue, managing memberof the Hogue Law Business Law Firm of
Northville, Michigan.
And today, as you can see on your screen, we'regonna talk about virtual legality fan favorite,
Microsoft.
And in this particular Reuters article, thefact that president Trump has said that
Microsoft is in talks to acquire TikTok.
(00:36):
Now I have some reservations about this story,some concerns about the way it's been reported
in the various places I have seen online, andthat's the reason that I've made this video
today.
But before we can get to that, let's see whatthe reporting actually says.
1st, Reuters says US president Donald Trumptold reporters on Monday, so this is about a
week ago, that Microsoft is in talks to acquireTikTok, and that he would like to see a bidding
(01:02):
war over the app.
Microsoft declined to comment, which isn't abig surprise for these big corporations.
They don't love to comment on these things, butit is worth noting that Microsoft itself has
not said it's interested in buying TikTok as ofthis point in time.
We basically have a statement from presidentTrump to reporters that Microsoft is
interested, and we're gonna talk about why thatmight be in president Trump's best interest
(01:27):
over Microsoft's.
TikTok, continues the article, which has abouta 170,000,000 American users, was briefly taken
offline just before a law requiring its Chineseowner, ByteDance, to either sell it on national
security grounds or face a ban took effect onJanuary 19th.
And that's only one sentence of this article,but it really is the most important piece of
(01:48):
this entire story, and there's a lot to unpackthere.
So let's talk about that law, the ban, and whatpresident Trump has done about it.
So looking at the law, we see it's called theProtecting Americans from Foreign Adversary
Controlled Applications Act, which really justrolls right off the tongue.
We're gonna call it the TikTok ban probably infurther references in this video.
(02:10):
But suffice to say, what it does is prohibitthe support mechanisms for an application that
is made by a foreign adversary.
Right?
So in this particular case, China, throughByteDance, is deemed to control the TikTok
application, and this law says it shall beunlawful for an entity to distribute, maintain,
(02:30):
or update a foreign adversary controlledapplication by carrying out in the United
States services to distribute, maintain, orupdate such controlled application by means of
a marketplace, etcetera, providing Internethosting services to enable the distribution
maintenance or updating of such foreigncontrolled application.
So what we saw on January 19th this past yearis a ban that took effect primarily through the
(02:55):
network infrastructure that supports TikTok.
You saw it from the App Store.
You saw it from, the various places that youmight otherwise access TikTok through your
iPad, your phone, or otherwise.
And they said we are taking it down.
Why?
Because the penalties for this are prettyextreme.
The enforcement of civil penalties for thisparticular law are that an entity that violates
(03:18):
subsection a, and again, we're talking aboutApple.
We're talking about Google here.
We're talking about infrastructure support forwhat is deemed to be one of these evil
applications like TikTok, shall be subject to acivil penalty in an amount not to exceed the
amount of results from multiplying $5,000 bythe number of users within the United States
determined to have access, maintained, orupdated the foreign adversary controlled
(03:41):
application as a result of such violation.
So one of the reasons you saw this ban go intoeffect immediately on the date shifting over to
January 19th was that Apple and other networkinfrastructure providers looked at this and
said, well, that's a lot of money.
You talk about a 170,000,000 potential Americanusers for this application, $5,000 per user.
We don't know if this is gonna get enforcedbecause it wasn't enforced by the Biden
(04:04):
administration on its last day in office.
Trump had already signaled that he was unlikelyto enforce it on his 1st day and on in office,
and we'll see that he is in fact not enforcingit right now as part of this video.
But those on the outside looking in that aren'tin control of the White House, don't know
what's gonna happen, say it's better to be safethan sorry, and we are not going to allow you
(04:24):
to access TikTok because we don't wanna getnailed by all these huge penalties for
otherwise providing it to you.
Now the other aspect of that is it isperformative in some respects.
If you don't like that this law was put intoeffect, if you don't like that this ban exists,
it does appear that ByteDance, TikTok, andother companies in the ByteDance family had a
significant desire to show you how much painwould be inflicted upon you if you're an
(04:48):
American citizen by virtue of this law.
And so on that particular morning, a lot ofstuff went down.
A lot of stuff was taken offline, includingthings that were clearly not designed to be hit
by this particular act, like the Marvel Snapcard game on your phone.
But you can also be sympathetic with thoseproviders and say, hey.
Look.
This law was just written this past year.
(05:09):
We don't know what's gonna happen from here onout.
This is a lot of money for us to play with.
It's our fiduciary duty to our shareholders tonot play with that money if we can otherwise
just knock down access, and so that's what wesaw that morning.
But you might also remember that the last timeI talked to you about this particular topic in
TikTok versus the US, I said I didn't thinkthat this law was likely to survive because I
(05:32):
thought it was a bill of attainder, anunconstitutional bill of attainder on under
United States law.
And if we aren't familiar with that term, Idon't blame you.
But a bill of attainder is described by theCornell Law School in their kind of treatise
piece here says, it's a piece of legislationthat declares a party guilty of a crime.
Bills of attainder allow the government topunish a party for a perceived crime without
(05:54):
first going through the trial process.
In the United States, bills of attainder areunconstitutional.
The constitutional ban on bills of attainderworks to uphold separation of powers by
preventing Congress from suing the functions ofthe judicial branch.
Right?
We have these three branches of government.
We have the Congress that writes the laws.
We have the executive, the president, that seesthem enforced, and then we have the judicial
(06:17):
branch, the court system, that says what thelaw means and in a criminal kind of proceeding,
says whether or not someone is guilty ofviolating a law.
Judges.
Right?
That's what judicial means.
That's where judgment comes in hand.
And if congress can just say, alright.
All murders are illegal.
That's fine.
But if they also say, and we determine that Bobis guilty of a murder, and so he gets all the
(06:40):
penalties without a court of, of appeals,without a trial process, without any due
process under the constitution, then we've gota problem.
And if we look at this particular law, we seewhat it applies to.
A foreign adversary controlled applicationmeans any of these technological applications
by any of ByteDance, TikTok, a subsidiary ofByteDance or TikTok, an entity controlled or
(07:05):
owned by ByteDance or TikTok, or moregenerally, a covered company that is controlled
by a foreign adversary as determined by thepresident to present a significant threat to
the national security of the United States.
So what is happening in this law is thatthey've made the no murders provision here.
You are a covered company if the executivedetermines that you present a significant
threat, and you give public notice, you make apublic report to Congress, you do these various
(07:29):
other things under the law, But also, we aredetermining on its face that ByteDance and
TikTok would fall under these categories, andyou don't get a say in it, mister executive.
And so I had said that I felt that this was abill of attainder, but as I often say in the
space, reasonable minds can differ, and thereasonable minds on the US District Court that
(07:51):
saw the first version of this case said, no.
It's not a bill of attainder.
Now I disagree with this provision.
We're gonna talk about it as part of thisvideo, but I disagree with this argumentation,
and I'll talk about why.
They describe the argument that TikTok makes asfollows.
TikTok claims the act is a bill of attainderand therefore prohibited by the constitution.
The government responds that the bill ofattainder clause does not apply to
(08:12):
corporations, and that in any event, the actdoes not constitute a legislative legislative
punishment.
We agree that the act is not a bill ofattainder, and that's how these decisions are
always written.
We tell you upfront what we decided, but thenwe're gonna explain our reasoning.
A law is a bill of attainder if it, 1, applieswith specificity, and 2, imposes punishment.
(08:33):
Well, it's pretty clear that this applies withspecificity.
We're not even gonna see them discuss thatbecause TikTok and ByteDance are named right in
the law.
So the question must be, does this law imposepunishment?
It says you cannot support this application.
If you do, you're gonna be fined to death.
So you we're we're effectively going to banaccess to this application in the United
(08:54):
States.
Is that a punishment for purposes of thisargument?
Because the act applies with specificity,that's all the court's gonna say about it, this
claim turns on whether the act can be fairlydeemed a punishment.
We conclude essentially that it does not.
Before turning to the tests, however, webriefly address the government's threshold
argument that the bill of attainder clause doesnot apply to corporations.
This is a silly argument.
When you are prosecuting a case like this ordefending a case like this, you throw out all
(09:17):
the arguments you can very often.
So the strongest one, whatever the court deemsto be the strongest, is on the wall as being
thrown out by you because you don't know whatis going to actually work for them.
But the US government saying corporationscannot be subject to a bill of attainder was
really never gonna play.
In other cases, as this court says, we haveassumed without deciding that the clause
(09:39):
applies to corporations, but emphasize thedifferences between commercial entities and
persons need to be considered.
We take the same approach here.
To determine whether a law constitutes apunishment, we analyze whether the challenge
statute falls within the historical meaning oflegislative punishment, the historical test,
whether the statute viewed in terms of the typeand severity of burdens imposed reasonably can
(10:00):
be said to further non punitive legislativepurposes, the functional test, and whether the
legislative record evinces a congressionalintent to punish the motivational test.
So they've got these three tests.
If you look at this, say, where is this in thelaw?
Where is this in the constitution?
The answer is it isn't in there.
If you go to law school, you'll see a lot ofthese things happening from the court side, but
the court makes a lot of rules and and kind ofrubrics that they determine these things on.
(10:25):
They make tests like this, then say this iswhat we're gonna decide it based on, and that's
how our presidential system works in the UnitedStates.
It's maybe not the cleanest way to evaluatethings like constitutional questions, but it is
the way that we do it.
So they adopt this test.
It's adopted years years ago.
It's the precedent the court will follow, andthey say this isn't going to fall under any of
(10:47):
these particular categories.
Now I look at this and say this sure seems likeyou are preventing me from conducting business
that I want to conduct as TikTok, as ByteDance,and that's a punishment by any reasonable
understanding of what would be a legislativepunishment.
Right?
It's not the death penalty for a murderer.
It's not that kind of thing because we'retalking about corporate forms here, but it is a
(11:10):
punishment.
The court, however, does not agree.
TikTok contends the act satisfies thehistorical test because it bars TikTok from its
chosen business.
TikTok reasons the provisions of the act areclose analogs to 2 categories of legislative
action historically regarded as bills ofattainder, confiscation of property, and
legislative bars to participation in a specificemployment or profession.
(11:30):
Yes.
They are accusing the US government ofessentially extorting them to lose their
business, lose their assets by virtue of thisparticular law.
According to TikTok, the act effectivelyrequires TikTok to relinquish its property or
see it rendered useless, and it precludesTikTok from continuing to participate in
legitimate business enterprise.
As already explained, however, the act requiresa divestiture That is a sale, not a
(11:52):
confiscation, as a condition of continuing tooperate in the United States.
And I find this argument to be wanting,politely.
If I were to come up to your house and say, youhave to sell this house right now, then you
would not be otherwise, limited in your abilityto claim that I was extorting you, that I was
trying to steal the value of your house in someimportant way just by the fact that I'm not
(12:17):
personally stealing the house from you, nottaking the money from you, that you're getting
it from another person.
Everybody knows that if you are forced to sellwhen you don't want to, you're gonna get lower
value for what your asset is in the marketbecause you aren't deciding when you are
receiving enough value to actually give up yourasset, whether that's your house or your
business.
And so I think that this, it's just adivestiture, not a confiscation, is a very
(12:42):
limited kind of argument to be made by thecourt.
But they find it compelling, and I am not ajudge in the district court.
I'm not a judge in the Court of Appeals or theSupreme Court, so I'm just a guy here talking
on YouTube.
I'm just telling you that I don't find thisargument to be very effective.
The court did.
The closer historical analog to the act is aline of business restriction, which does not
(13:03):
come within the horse historical meaning of alegislative punishment, and they have some
precedence on that.
The bill of attainder clause tolerates statutesthat in pursuit of legitimate goals such as
public safety or economic regulation, preventcompanies from engaging in particular kinds of
business or particular combinations of businessendeavors.
And so they say, essentially, this is anownership kind of complaint.
(13:26):
We are allowed to regulate who owns you.
We are unhappy with the fact that China ownsyou, so this is not a bill of attainder.
It's not a punishment on those grounds.
They also pass the functional test, basically,that they are not specifically just trying to
punish you.
They're trying to accomplish something else.
In this case, they're trying to accomplishnational security or data protection, And
because we're also going to find as part ofthis decision that they meet strict scrutiny
(13:50):
standards for first amendment complaints, weare obviously going to find that this passes
the functional test here.
Finally, they say that we can't use themotivational test because given the obvious
restraints on the usefulness of legislativehistory, congressional intent to punish is
difficult to establish.
Indeed, the motivational test is notdeterminative in the absence of unmistakable
(14:11):
evidence of punitive intent.
So the court says we're throwing our hands upon your motivations to pass this law because we
can't possibly know that.
Now one might ask the question based on thislanguage, how did this become part of the test
as it stands?
The court is not going to answer that for us,but suffice it to say, they're gonna say that
this particular law, which prohibits anybodyfrom helping TikTok, as named in this
(14:34):
particular law despite the fact that thepresident has not separately found them to be a
security concern because Congress has to not bea bill of attainder.
I disagree with that argument, but that's howit was decided before it headed up to the
Supreme Court.
And if you follow the TikTok story, you knowthat the Supreme Court did not otherwise
(14:55):
declare this law to be unconstitutional either.
And in so doing, they did it on the basis of itnot violating the First Amendment.
Now I thought the First Amendment claim wasalready a weak one because this particular law
was not strictly aimed specifically at thespeech of TikTok, the speech of ByteDance, the
speech of any of these companies that mightotherwise fall under this act's purview, but
(15:17):
instead was particularly focused on theownership kind of consideration.
That's different from it being a bill ofattainder.
That's different from naming TikTok andByteDance.
But I always thought this was a weak argument,but it's important to know from our legal
perspective that the bill of attainderargument, those arguments that I thought were
the strongest, did not make it up past theappeals court level.
You have to pick your battles when you'reasking the Supreme Court to look at your
(15:40):
questions, and the Supreme Court was alwaysgonna be more compelled by a first amendment
consideration.
So that's what TikTok brought before it, andthe Supreme Court did not, in deciding that
this law was constitutional, otherwise opine onthe bill of attainder or takings clause
arguments that TikTok brought before the lowercourts.
I also wanted to read for you just a little bitof the history of this particular case because
(16:01):
I think it's interesting in respect topresident Trump, which is going to be a major
factor in the rest of this conversation.
In recent years, says the Supreme Court of theUnited States, US government officials have
taken repeated actions to address nationalsecurity concerns regarding the relationship
between China and TikTok.
In August of 2020, president Trump issued anexecutive order finding that the spread in the
(16:22):
United States of mobile applications developedand owned by companies in China continues to
threaten the national security, foreign policy,and economy of the United States.
President Trump determined that TikTok raisedparticular concerns noting that the platform
automatically captures vast swaths ofinformation from its users and is susceptible
to being used to further the interests of theChinese government.
(16:43):
The president invokes his authority under theInternational Emergency Economic Powers Act,
IIPA.
You've heard me reference that in respect toTencent and virtual reality very recently, as
well as in other context for both this Trumpexecutive order we're discussing right here and
in the past, IIPA and the National EmergenciesAct to prohibit certain transactions involving
ByteDance or its subsidiaries as identified bythe Secretary of Commerce.
(17:06):
The secretary published a list of prohibitedtransactions in September 2020.
Federal courts enjoined the prohibitions beforethey took effect, finding that they exceeded
the executive branch's authority under IIPA.
Just days after issuing his initial executiveorder, president Trump ordered ByteDance
Limited to divest all interests and rights inany property used to enable or support
(17:26):
ByteDance's operation of the TikTok applicationin the United States along with any data
obtained or derived from US TikTok users.
ByteDance and TikTok filed suit in the DCCircuit challenging the constitutionality of
the order in February of 2021.
The DC Circuit placed the case in abeyance topermit the Biden administration to review the
matter and to enable the parties to negotiate anondivestiture remedy that would address the
(17:47):
government's national security concerns.
You might remember all of this, but I thinkit's a useful summary of what happened with
respect to TikTok.
Throughout 2021 and 2022, the Bidenadministration, ByteDance negotiated with
executive branch officials to develop anational security agreement that would resolve
these concerns.
Executive branch officials ultimatelydetermined, however, that ByteDance proposed
agreement did not adequately mitigate the risksposed to US national security interests.
(18:10):
Negotiation stalled and the parties neverfinalized the agreement.
Against this backdrop, congress enacted theprotecting Americans from foreign Adversary
Controlled Applications Act, and the act makesit unlawful for an entity to provide certain
services to distribute, maintain, or update anan application like TikTok.
Entities that violate this prohibition aresubject to civil enforcement and hefty monetary
penalties.
(18:31):
The act provides two means by which anapplication may be designated an application of
this sort.
First, the act expressly designates anyapplication that is operated by ByteDance or
TikTok or any subsidiary thereof.
2nd, the act establishes a general designationframework for any application that is operated
by a covered company, controlled by a foreignadversary, and determined by the president to
present a significant threat.
(18:53):
In broad terms, the act defines covered companyto include a company that operates an
application that enables users to generate,share, and view content, and is more than a
1000000 monthly active users, and excludes fromthe definition a company that operates an
application whose primary purpose is to allowusers to post product reviews, business
reviews, or travel informational reviews.
And this particular aspect is one of the waysthat TikTok tried to fight this law to say that
(19:13):
it was content focused.
The worst thing that you can do under the FirstAmendment in the United States is pass a law
that specifically prohibits a given type ofcontent.
Right?
You aren't allowed to pass a law that says,thou shall not say good things about the
country of China.
Thou shall not say good things about theMicrosoft Corporation or bad things.
(19:35):
Either way, you can't speak specifically to thecontent.
You have to do these facially neutral kind oflaws.
And in this case, Congress has aimed itspecifically at the company on the notion, at
least in some of the legislative record, thatthey aren't happy with some of the stories and
the way the algorithm works for TikTok orByteDance, but on a security basis that they
aren't happy with the way that China controlsaccess to the algorithm and could easily change
(19:58):
it tomorrow to be even worse than it is rightnow.
The axe prohibitions take effect 270 days afteran application is designated a foreign
adversary controlled application, and that datethat that it took effect is January 19, 2025, a
day after this opinion is actually written bythe Supreme Court.
The act exempts a foreign adversary controlledapplication from the provisions if the
(20:19):
application undergoes a qualified divestiture.
We'll talk about that more in just a minute,but there are ways in which you can get out of
the operation of this act if you are sellingyour company.
That was the design that was hopefully from thecongressional standpoint to get ByteDance and
TikTok to sell their interests in theapplication and more specifically the algorithm
(20:39):
so that there wouldn't be this security concernhanging over congress's head.
And in this particular decision, the SupremeCourt ultimately determines that the First
Amendment isn't implicated.
The law goes into effect, and then, well, itstops being into effect.
From backing a ban to being hailed as a savior.
(21:02):
Inside Trump's TikTok shift is reported by theAssociated Press few weeks ago now, January 19,
2025.
During his first term as president, as we justheard described by the Supreme Court, Donald
Trump led the effort to ban TikTok, the hugelypopular video sharing site he said posed a
threat to US national security.
But on the eve of his return to the WhiteHouse, the president-elect is being hailed as
(21:23):
the app savior.
After going dark for users this weekend, Trumpsaid on his social media site that he would
issue an executive order after he sworn in fora second term on Monday, delaying a TikTok ban
so that we can make a deal to protect ournational security.
Thanks for your patience and support, read theannouncement from TikTok.
As a result of president Trump's efforts,TikTok is back on in the US.
(21:43):
So if you were on TikTok, you were otherwisefollowing this story on social media on January
19th this year, you saw it be taken down.
You saw Apple restrict access to TikTok, andthen you saw a note from TikTok saying we're
back, thanks to president Trump.
And that's part and policy of politics.
Right?
That's what president Trump is trying toachieve here, but it was an interesting
question for folks looking at this particularstory.
(22:06):
That's what happened on 19th.
And then as promised on 20th, as NPR reportshere, Trump signs an executive order to pause
TikTok ban and provide immunity to tech firms.
Now we don't have to take NPR's word for it.
We can actually look at the order itself, andthat order is called the application of
protecting Americans from foreign adversarycontrolled applications act to TikTok.
(22:29):
Now that's an interesting really long form wayof describing this since the act itself
includes TikTok in its language.
But suffice to say this order, which is anorder of the executive branch, it's the
president saying this is what I would like myexecutive branch, my agencies, my people to do
with respect to this law, says the following.
The act regulates foreign adversary controlledapplications, specifically those operated by
(22:52):
TikTok and any other subsidiary of its Chinabased parent company, ByteDance, on national
security grounds.
Section 2 a of the act prohibits entities fromdistributing, maintaining, or updating certain
defined foreign adversary controlledapplications within the territory.
We talked about this.
Under section 2 a of the act, the provisionstake place and become effective on January 19,
2025.
(23:12):
President Trump says I have the uniqueconstitutional responsibility for the national
security of the United States, the conduct offoreign policy, and other vital executive
functions.
So here you can see what he's trying to do inthis particular order is say, the executive is
vested with the control of foreign relations,and so I'm going to claim that authority in
this document.
To fulfill those responsibilities, I intend toconsult with my advisers, including the heads
(23:34):
of relevant departments and agencies on thenational security concerns posed by TikTok and
to pursue a resolution that protects nationalsecurity while saving a platform used by a
170,000,000 Americans.
My administration must also review sensitiveintelligence related to those concerns and
evaluate the sufficiency of mitigation measuresTikTok has taken to date.
The unfortunate timing of section 2 a of theact, one day before I took office as the 47th
(23:57):
president of the United States, interferes withmy ability to assess the national security and
foreign policy implications of the act'sprohibitions before they take effect.
Now understand, the law does not have a rolefor the president in deciding whether or not an
application run by ByteDance or TikTok fallsunder this category.
Remember, they are named parties in this law.
(24:18):
So this is already kind of stealing a base thatthe president is doing right here.
That's gonna be part of this story as wecontinue through it with this video.
This timing also interferes with my ability tonegotiate a resolution to avoid an abrupt
shutdown of TikTok platform while addressingnational security concerns.
Accordingly, I'm instructing the attorneygeneral not to take any action to enforce the
(24:38):
act for a period of 75 days from today.
I hereby order the attorney general not to takeany action on behalf of the United States to
enforce the act for 75 days from the date ofthis order to permit my administration an
opportunity to determine the appropriate courseof action with respect to TikTok.
During this period, the Department of Justice,that's an executive branch agency, shall take
no action to enforce the act or impose anypenalties against any entity for any
(25:02):
noncompliance with the act.
So we've got a law.
It's on the books.
It's written by Congress.
It's signed by the president.
It is upheld by the Supreme Court, and the newadministration, the new president comes in and
says, I'm not going to enforce that law for atime, not because I think it's
unconstitutional, but because I don't feel likeI have a good understanding of this particular
situation, and so I'm not gonna enforce.
I'm gonna tell my attorney general not toenforce it.
(25:25):
The problem with that, as president Trump hasundoubtedly already become aware, is that he
takes an oath to defend the constitution, andpart of the presidential powers are that he
shall take care that the laws be facefaithfully executed.
This is the take care clause if you've everread the US constitution.
This is what the president does.
(25:46):
I just described the legislative as writing thelaws and the president as executing them or
enforcing them.
The president is supposed to enforce basicallyevery law, and this is an argument.
This is a discussion about what that means inpractice as written by the constitution center.
I'm not gonna take a policy position on thisone way or the other, but you can see that
there's a lot of debate as to what thisparticular clause, very short but very
(26:09):
important, means in practice.
At the same time, the provision serves as amajor limitation on his power because it
underscores the executive is under a duty tofaithfully execute the laws of congress and not
disregard them.
At a minimum, the clause means that thepresident may neither breach federal law nor
order his or her subordinates to do so, fordefiance cannot be considered faithful
(26:31):
execution.
So if we look at the law, we see that theenforcement mechanism is the attorney general
finding there to be a problem and imposing thefines that are set forth in the law.
The president has within his branch, theattorney general in the Department of Justice,
he tells him not to do that.
Is that faithful execution of the laws?
I certainly have questions there.
But the clause raises a number of vexingquestions.
(26:53):
For instance, must the president enforce thoselaws he or she believes to be unconstitutional?
Some scholars argue the president must enforceall congressional laws without regard to his or
her own constitutional opinions.
I would disagree with that very significantly.
As I just said, the president and Congress bothhave to take oaths to defend the constitution,
and Congress shouldn't be passingunconstitutional laws, but the president
(27:13):
shouldn't be enforcing them if he believes inthe unconstitutional.
Now in this particular case, the Supreme Courthas held that this law is not a violation of
the First Amendment.
Could be a violation of something else notraised before the Supreme Court.
Either way, it's determined to beconstitutional for purposes of legal argument
right this second, so the president reallydoesn't have those grounds to stand on.
There's also the related question of whetherthe president must honor statutes that purport
(27:34):
to limit his or her authority over lawexecution.
Can Congress decree by statute that thepresident must allow others to implement
certain statutes without regard to presidentialsupervision or oversight?
Now we see in the definition in this law thatmost of the categories of who could be impacted
by this law are to be determined by thepresident or his branch in general through
(27:56):
interagency discussion, except for applicationsthat are made by TikTok or ByteDance.
So I think there is an argument here that atleast says that Congress is trying to usurp the
power of execution, the power of the presidencyby including as maybe not a bill of attainder,
but a named party in this particular lawoutside of the broad ambit of who is otherwise
(28:18):
gonna be impacted by it, but that isn't raisingthe executive order either.
Finally, the sweep of contemporary federal lawensures that federal law enforcers have
tremendous enforcement discretion, and this isreally what comes up most in the modern
presidential era.
In particular, resource constraints coupledwith numerous violations often preclude a
policy of total enforcement.
Said another way, we have so many laws on thebooks and so much that the president or the
(28:42):
attorney general or the Department of Justiceor the FTC or the SEC or whoever you're
thinking of could enforce that there is nopossible way that they could enforce every
violation against every violator.
So there's already some amount of discretionthat is within the executive branch because
they don't have the resources to imposepenalties or other impacts on every violator of
(29:02):
federal laws.
Now you can argue that's not a great place tobe.
I would certainly be sympathetic to thatargument, but it does mean that even with the
take care clause in effect, the executivebranch and the presidency in particular has the
right to make certain policy determinations asto where the resources should go, what laws
need to be most enforced over others, what wemight call, if you're familiar with sports
(29:25):
terms in the United States, a point ofemphasis.
We are going to instruct our agencies orwhatever aspects of the executive branch are
implicated to focus on these particular laws,these particular violations, and put our money
and our resources there, and that might causeother laws to go by the wayside, but that's the
purview of the executive branch.
None of that is implicated here, but it'simportant to understand that that's a problem
(29:48):
for president Trump because the law actuallydoes have a concept of penalties, who enforces
them, the attorney general as we justdiscussed, and what you might do to extend the
time frame of the ban to give more time forTikTok and ByteDance to operate.
And that is to say congress said, with respectto a foreign adversary controlled application,
(30:10):
TikTok, the president may grant a one timeextension of not more than 90 days with respect
to the date on which this subsection wouldotherwise apply if the president certifies to
congress that a, a path to executing aqualified divestiture, a sale, has been
identified with respect to such application, b,evidence of significant progress towards
(30:30):
executing such qualified divestiture has beenproduced with respect to such application, and
so all of these need to apply.
He needs to certify all of this to congressthat there are in place the relevant binding
legal agreements to enable execution of suchqualified divestiture during the period of such
extension.
So Congress has said, alright.
There might be an issue with this timing.
We understand this might come up, misterpresident.
(30:52):
You get one time to extend it for 90 days.
And if you decide to extend it for 90 days,then you have to certify to us.
You need to make a report to us that all thesethings are in place, that you're on your way to
a sale, that there is significant progresstowards that sale, and that we can enter into a
closing document.
We can actually execute this sale within the 90days that we are willing to extend this time
(31:15):
frame of.
But you might recall, in that executive order,we didn't see a 90 day time frame.
We saw a 75 day time frame.
That's outside the purview of the law entirely,and it is in respect to the attorney general
not enforcing these particular penaltyprovisions.
Nothing to do with whether there's a qualifieddivestiture, which leads us to Trump's problem.
Can Trump put a pause on the TikTok ban?
(31:36):
Or as the Associated Press says, since anextension on a ban can only occur if
significant progress has been made towards asale, it's possible that Trump's order could
face legal challenges.
In fact, we would anticipate it.
On Sunday, senator Tom Cotton of Arkansasposted a message on x listing a number of state
and federal agencies and private entities thatmight be willing to go to court to get the ban
enforced.
However, it's unclear if anyone is planning tochallenge Trump's order.
(31:59):
One thing that happens in the law, and I knowwe talk about it a lot in virtual reality on a
real politic basis, is that if no one's willingto fight over this, chances are you can do
whatever you want from a government role.
If you're not going to challenge a law asunconstitutional, Congress can pass that law,
can enforce that law, and if it's notchallenged, then the court doesn't get to say
anything on it.
In this particular case, if you sign anexecutive order and there's an a legal problem
(32:21):
that nobody decides to challenge, we'll neverknow if there was a real legal problem because
nobody decided to challenge it.
So we don't know whether it would bechallenged, but if somebody wanted to challenge
it, it would be on the basis that Trump doesnot have the ability to just say no.
I'm just gonna ignore that law entirely.
I'm gonna tell my entire, branch to ignore thatlaw for a period of time that was designated by
me outside of any of the times stated in thelaw.
(32:44):
And if you do challenge me, chances are whatyou're going to say is that you have to prove
that we are moving close to a sale.
So as I just mentioned, Trump brushes off TicTac National Security concerns while calling
for a 50% deal as reported by the ABC News is afunction of that particular conversation.
(33:04):
It's Trump, outside of his executive order,trying to say that he's still acting within the
purview of the law, because to do otherwisewould be to violate his his constitutional
oath.
Or as he says in the quote in this article,TikTok is worthless.
Worthless if I don't approve it.
It has to close.
I learned that from the people that own it.
If I don't do the deal, it's worthless.
(33:24):
Worth noting, if I do the deal, it's worthmaybe a $1,000,000,000,000.
A trillion, Trump said.
He continued to argue that there should be atleast 50% US ownership of the app, although he
didn't make mention of the national securitythat prompted the app's ban in the 1st place.
Trump notably called for a ban on the app dueto national security during his first term.
If I do the deal for the United States, then Ithink we should get half.
(33:44):
In other words, wait.
I think the US should be entitled to get halfof TikTok.
And congratulations, TikTok has a good partner,and that would be worth, you know, could be
500,000,000,000 US dollars or something.
And, again, if you look at these quotes andthink, wow.
This sounds like a shakedown.
This sounds like a US government extortionscheme on whatever the asset value of TikTok
is.
I'm not going to blame you.
But as part of this story, Trump's got aproblem.
(34:07):
Trump thinks TikTok is worth something.
Trump thinks that if they're gonna legallychallenge him on this executive order that he
needs to have somebody ready to buy the companyor at least willing to say that they could buy
the company, you wind up with an article likethis one or a statement from Trump like this
one that says Microsoft is in talks to acquireTikTok.
Right?
So my supposition here, and, again, it's justthat, it's just speculation on my part, is that
(34:29):
Microsoft is one of the few companies in theUnited States, indeed, it's one of the few
companies on earth that could plausibly say atthe level that Trump is talking about, that we
have the cash or other assets that we couldpurchase this particular company.
And as part of that $3,070,000,000,000 marketcapitalization, they can also be obsequious to
(34:52):
the new incoming administration.
We know from our experience with the MicrosoftCorporation covering it in this context and
just watching it in the news and otherwise thatthey have as their chosen political approach in
things like regulatory review of deals thatthey have made in video games and otherwise in
the past, that they want to be as positive aspossible towards the governments that are
(35:15):
regulating them.
They do not wanna be seen as an antagonist.
They wanna be seen as a fellow traveler tothese particular governments, and that is well
within their rights as a corporation orotherwise to do, but we know this about them.
And if you're president Trump and you'relooking at a potential legal challenge for this
particular issue, you don't wanna lose that,then it behooves you to suggest that one of the
few companies that could actually buy anapplication the size of TikTok is willing to do
(35:40):
so, if that company is otherwise as obsequiousas they are.
And this is an article that I pulled up that Iwas doing while I was reviewing this, video
that says from Microsoft on AI that as we usherin a new year, we will welcome a new president
into the White House as well as a goldenopportunity for American technology and
economic competitiveness.
And again, this is not a political statementhere.
(36:01):
This is not super unusual for corporations totake this approach, but it is worth noting that
Microsoft, this huge multi $1,000,000,000,000corporation has throughout all of these
conversations we've had in virtual reality nowfor years, taken the tact that we are going to
buddy up with whatever the administration isdoing at that point in time in the United
States history.
And so it it makes all the sense in the worldto me looking at this particular issue that
(36:24):
when they say things like in sum, as we look tothem 4 years ahead, there are many reasons to
be optimistic that they are a chosen vesselthrough which president Trump and his
administration can say, look, we're movingforward with a potential TikTok sale.
If anybody wants to challenge me on this, I candefend, not just because he might be able to do
that because Microsoft actually is engaged inthese conversations, but also to actually knock
(36:46):
down the possibility of people challenging himon the legal grounds we just talked about.
Because if there is somebody that couldpotentially buy this company within the next 90
days, then that legal challenge is likely tofail in any event.
So people asked me to talk about thisparticular story.
I saw it in the news a couple of days ago, andthe very first thing I thought was that
Microsoft in particular and Brad Smith, theirVP of government relations specifically, is in
(37:12):
the business of buddying up to administrations,is in the business of making friends with
governments for purposes of benefiting theMicrosoft Corporation and being able to use the
Microsoft name.
I don't think president Trump would have doneit without permission.
It's useful to him for purposes of thisparticular conversation.
So I wanted to frame that for you in that wayas part of this talk because I think TikTok is
one of the biggest, most interesting stories ofthe year.
(37:34):
I think Microsoft is always interesting andworth talking about because they are so big and
have their hands in so many pies in the UnitedStates and globally, but also because I thought
there was a lot of misinformation out there inthe world and that it is more useful to go
through the source material, look at the laws,look at what's actually being demanded of the
presidents, what the executive order actuallysays, and how Microsoft can play a part in this
(37:56):
particular story with you all today.
Now that's virtual reality for today.
If you like this video, if you wanna supportthe channel financially or otherwise, please
consider becoming a member of the channel.
We're gonna do more membership, early videoslike this one, super chats on live videos.
Patreon, you might notice if you've been here anumber of times that I have removed player and
Utreon from the support systems for thischannel primarily because in looking at my
(38:21):
activities after my stroke a couple of yearsago, I've determined that I am incapable or
unable to actually support both platforms atonce.
So if you do support us on player right now,please consider coming over to Patreon or
through YouTube directly and memberships.
Otherwise, nobody should feel obligated tosupport us financially at all.
I appreciate every little bit of help whetherthat comes as financial support or just
(38:43):
subscriptions, up votes, comments.
I try to respond to as many comments as I canon this channel or just telling your friends
that we're having conversations like this one.
If you find them helpful, if you find themuseful, informative, educational, entertaining,
what have you, tell your friends we love tohave people here.
I love to have the community talking aboutthese particular issues so that we can have
good reasonable conversations about things thatmight be very, very different approaches from
(39:07):
different people, in our comments.
I very much appreciate all of that support.
Otherwise, those questions and comments areones that I see very, very often, and I try to
respond as much as I possibly can.
Virtual Legality is a YouTube video series withaudio podcast versions presented as commentary
and for education and entertainment purposesonly.
(39:28):
It does not constitute legal advice and doesnot create an attorney client relationship.
If you have legal questions about the topicsdiscussed, please consult your own legal
counsel.
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