TikTok on the Clock: What Brands Should Consider Pending a Potential TikTok Ban

Background

A potential ban of the popular social media app, TikTok, has been in the news for years, but recent events suggest that it may become reality for Americans in the coming weeks. On December 6, 2024, the U.S. Court of Appeals for the D.C. Circuit upheld the TikTok divest-or-ban law as constitutional, finding it does not violate the First Amendment. The law requires the Chinese-based parent company of TikTok, ByteDance, to divest from TikTok or face a ban on U.S. networks and app stores. The Court of Appeals acknowledged that the law implicates the First Amendment but held that the law “is part of a broader effort to counter a well-substantiated national security threat posed by the PRC.”¹ If the law is not overturned, TikTok and ByteDance have claimed that the service will shut down in the U.S. by January 19, 2025.

On Monday, December 9, 2024, TikTok and ByteDance filed a motion in the same court to try to pause the ruling until the Supreme Court of the United States reviews the company’s challenge to the statute. Whether or not the ban occurs remains to be seen. President-elect Donald Trump stated during his most-recent campaign that he would not support the ban. It is also unclear if the Supreme Court will take up the case, but it would offer the justices an opportunity to weigh in on various novel issues concerning social media platforms, the First Amendment, and the constitutional limits of the government’s authority in relation to national security.

Potential Issues for Brands to Consider

Whether paying for advertisements on the platform or engaging influencers or other third parties to promote their brand, thousands of U.S.-based companies use TikTok to promote and sell goods and services via the platform. Accordingly, all such companies need to be aware of how this legislation might affect their business. Here are a few questions that brands will likely need to consider:

1. What does your contract say?

Many brands have contracts with content creators and so-called “influencers” in connection with the promotion of their goods and services via the TikTok platform. Brands need to understand what on-going obligations exist and under what circumstances the engagement may be terminated.

2. Will the ban qualify as a “force majeure event” under the contract?

The lawyer answer is, “It depends.” Assuming that the contract includes a “force majeure” clause, the application of the clause will depend on the scope and substance of the contractual language. Similarly, the foreseeability of an event tends to be an indispensable element within any force majeure analysis, which may prove to be a problem for parties seeking to avoid performance due to a legislative ban of the platform.

3. What happens to the content that is already on TikTok?

If TikTok is banned, the content will not immediately disappear. For instance, if someone already has the app downloaded on their phone, the user will still be able to access the app and existing content from their phone. Whether this legacy content will remain accessible to users inside or outside of the U.S. is unknown, but we do know that the app would no longer be available to be downloaded on the app stores, and TikTok would no longer be able to send updates, security patches, and bug fixes. So, the app would become essentially unusable over time.²

4. Can brands move content from TikTok to other platforms?

If the agreement between the influencer and the brand provides that the content is owned by, or licensed to, the brand, then the brand is likely free to publish and distribute that content via other platforms. Social media platforms such as Instagram Reels and YouTube will likely rise in popularity if TikTok is no longer available, so those are good pivot options for brands seeking to migrate such content. As noted above, the content will probably not be deleted from TikTok immediately, but it will need to be accessed from the creator and uploaded to the desired platform.

5. What should be included in new engagements and contracts?

Going forward, brands should include termination provisions in the agreements that state that the contracts will no longer be enforceable in the event that the government bans TikTok. By having a provision that states that once access to TikTok becomes unavailable, this agreement will no longer be enforceable, brands will be protected from having to spend unnecessary dollars to terminate an engagement. The entire point of the agreement would have become moot at that time if they can no longer pay influencers to promote their brand.

As with all technology, the landscape is constantly changing, and it’s important to stay updated and informed. If you have any questions about how the potential TikTok ban will impact your business, please contact AGG Entertainment and Sports team chair Matt Wilson or attorney Avery Carter.

[1] TikTok Inc. & Bytedance Ltd. v. Garland, Nos. 24-1113, 24-1130, 24-1183, 2024 U.S. App. LEXIS 30916 (D.C. Cir. Dec. 6, 2024).

[2] https://apnews.com/article/tiktok-divestment-ban-what-you-need-to-know-5e1ff786e89da10a1b799241ae025406.