TikTok will challenge Trump order banning U.S. transactions, company confirms

  • TikTok could challenge the president's Aug. 6 executive order banning U.S. transactions as early as next week. 
  • The challenge to the Aug. 6 executive order doesn't affect sale discussions with Microsoft and Oracle. 
  • TikTok is working to ensure its employees continued to get paid even in the event that it is in fact banned in the U.S., a person familiar with the matter told CNBC.

TikTok plans to sue the Trump administration as early as next week over the president's executive order banning U.S. transactions with the popular video-sharing app and its Chinese parent ByteDance, the company confirmed.

Under the president's executive order issued Aug. 6, any transactions with ByteDance subject to U.S. jurisdiction will face prohibition in 45 days. The full extent of the ban is unclear, as it gives the Secretary of Commerce the power to identify those transactions subject to Trump's order.

A separate order issued on Aug. 14 gave ByteDance 90 days to divest the U.S. operations of TikTok. ByteDance is in talks with potential acquirers like Microsoft and Oracle. The challenge to the Aug. 6 executive order doesn't affect the sale discussions with Microsoft and Oracle. 

"Even though we strongly disagree with the Administration's concerns, for nearly a year we have sought to engage in good faith to provide a constructive solution," a TikTok spokesperson told CNBC Saturday. "What we encountered instead was a lack of due process as the Administration paid no attention to facts and tried to insert itself into negotiations between private businesses."

"To ensure that the rule of law prevails and that our company and users are treated fairly, we have no choice but to challenge the Executive Order through the judicial system," the spokesperson said.

Reuters first reported the news.

TikTok is working to ensure its employees continue to get paid even if the app is banned in the U.S., according to a person familiar with the matter. The app is popular among teenagers and is known for sharing videos of dances and comedy routines in 60-second bites, many of which go viral.

U.S. officials are concerned that information on TikTok users could be passed on to China's communist government, and the Trump administration is stepping up efforts to remove Chinese apps from U.S. online networks on national security grounds.

The Chinese company Tencent, which owns the messaging app WeChat, was also hit with an executive order banning U.S. transactions.   

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