President Donald Trump and Attorney General Pam Bondi were sued Thursday over their approval of ByteDance’s TikTok U.S. asset sale, with plaintiffs claiming the deal violates 2024 divestiture requirements. The lawsuit could force a renegotiation of the agreement that created TikTok USDS Joint Venture LLC, potentially disrupting the app’s operations for 200 million American users.
Key Takeaways
- Lawsuit challenges TikTok deal as illegal under 2024 law
- Public Integrity Project seeks renegotiation preventing political censorship
- ByteDance retains control despite 80% non-Chinese ownership structure
Legal Challenge Emerges
The Public Integrity Project filed the lawsuit in the U.S. Court of Appeals for the District of Columbia on behalf of two retail investors in rival social media companies 1. The suit aims to require a renegotiation that “doesn’t put administration allies in a position to censor political content on one of the world’s most popular media platforms.”
Congress passed legislation in April 2024 requiring ByteDance to sell its U.S. assets by January 2025 or face a ban. However, Trump opted not to enforce the law, and Bondi told companies they would face no liability for continuing to allow TikTok use 1.
Deal Structure Under Scrutiny
ByteDance announced TikTok USDS Joint Venture LLC was finalized in January, with 80% ownership by non-Chinese investors including Oracle and Silver Lake. The company said the structure would secure U.S. user data, apps and algorithms through enhanced privacy and cybersecurity measures 1.
The lawsuit contends that “under the announced deal, ByteDance would still control all the essential elements of TikTok.” Plaintiffs argue this arrangement “would subvert the very purpose of the TikTok Law, as ByteDance could continue to push Chinese propaganda and censor the content it does not like” 1.
First Legal Challenge to Deal
This represents the first legal challenge to the joint venture arrangement that proved key to TikTok’s survival in the United States. The suit could shed light on the new structure that has faced criticism from some lawmakers despite Trump’s declaration that it meets divestiture law requirements 1.
The controversy stems from years of national security concerns over TikTok’s Chinese ownership. Trump previously attempted to ban the app in 2020, leading to extensive litigation and proposed sales to Microsoft and Oracle that ultimately failed 2.
Regulatory Uncertainty Continues
The White House, Justice Department and TikTok did not immediately respond to requests for comment on the lawsuit 1. The legal action adds new uncertainty to TikTok’s U.S. operations following the Supreme Court’s recent decision upholding the Protecting Americans from Foreign Adversary Controlled Applications Act 3.
Industry observers note the lawsuit reflects ongoing concerns about foreign control of major social media platforms used by millions of Americans. The case could establish important precedents for future foreign-owned tech companies operating in the U.S. market.
Market Impact and Outlook
While the lawsuit does not seek to force a TikTok ban, successful litigation could require restructuring the current arrangement. This would create operational disruption for the platform and its parent company during a critical period for the app’s U.S. presence.
The outcome may influence how other Chinese-owned technology companies structure their U.S. operations to comply with national security requirements. Legal experts suggest the case will test the boundaries of executive authority in approving foreign divestiture agreements.
Not investment advice. For informational purposes only.
References
1David Shepardson and Andrew Goudsward (March 5, 2026). “Trump, Bondi face lawsuit over approval of ByteDance TikTok US asset sale”. Reuters. Retrieved March 5, 2026.
2“Donald Trump-TikTok controversy”. Wikipedia. Retrieved March 5, 2026.
3“U.S. Supreme Court Upholds TikTok Sale-or-Ban Law”. Holland & Knight. Retrieved March 5, 2026.