Many people in China are wondering: Why is TikTok suing the U.S. Government? It cannot expect the U.S. courts to be fair, can it? After all, with recent targeting of Chinese businesses and individuals by the Trump administration and U.S. Congress, how can TikTok expect justice in America?
My answer is: Anything is possible when you litigate in the U.S. Yes, there is prejudice and political bias, and TikTok may not get a fair trial. But even if it were to lose in court, TikTok and others may benefit from the effects of the legal proceedings.
TikTok will also be fulfilling its social responsibility and making an important impact in U.S.-China relations. It will set an important precedent in the world for dealing with the new problems in today's technological societies.
Firstly, we must understand the social culture and ethics in U.S. society that are very different from China's. In the U.S., you must defend your rights. It is a bully culture and you must be able to "stand your ground." Legal defense is a good deterrent. If you do not put up a struggle, you are considered to be in the wrong. You would become "fair game" and subjected to other unreasonable demands and ill treatments. Your misery has not ended.
In TikTok's case, being banned for national security excuse is one thing. If its shareholders do not put up a legal fight, they would not be able to sell their interests for a fair price. Even if they sell, Donald Trump has already threatened to confiscate a portion of the proceeds. There will be no chance for an arm's length transaction.
Secondly, in litigation, TikTok can force its opponents and witnesses to disclose matters under oath. Even if TikTok were to lose the lawsuit, the court may grant the company and its shareholders rights and recourse that could be beneficial in their subsequent negotiations and conduct of business. During discovery, and in the court's rulings on issues related to the case, there will always be surprises and twists and turns.
Given TikTok's present predicament, it has nothing to lose by litigating. The executive orders issued by Trump are fraught with technical as well as practical problems. He may have subverted legal due process in exercising his power. By bringing a lawsuit, TikTok is opening up a host of potentially complicated issues for him. At the very least, it will likely result in a delay in the administrative process, buying time for TikTok and its shareholders.
Meanwhile, when the deadline arrives for TikTok to be "banned," the Trump administration has to deal with the practical problems of closing down TikTok's operation. How do you do that? Will the users challenge the actions, protest, or worse? The pressure, by not complying with the executive order, actually rests on Trump's shoulders, not TikTok's.
If TikTok's shareholders were to sell all or part of their stake, the lawsuit still stands. They can still claim that their sale is forced and under the circumstances, they cannot get a fair price nor an arm's length transaction, and can seek damage. In fact, for some of them, this may be the optimal strategy — cash in, and still litigate.
Lastly, the much bigger issue concerns global political norms and Chinese national pride. The year 2020 is not 1900, being two gengzis (庚子) or 60-year cycles apart. Chinese and China today are not the weak and kowtowing Qing-period pariahs and a defenseless country. Appeasement and surrender to Western hegemonic behavior not only did not buy China peace, but opened the door wide for further abuse and aggression.
TikTok has to show the world that it has backbone and would not be bullied without staunch resistance. Already, with Trump's actions, TikTok has gained invaluable brand recognition and free advertising. It stands to gain even more under the continuing limelight. In the propaganda and psychological warfare waged by the U.S. on China, TikTok's legal challenge is universally popular and effective.
This litigation will likely be an important historic case for the U.S. and the world. It involves a lot of technical issues including, but not limited to, U.S. constitutional construction on how national security power should be distributed among the various branches of government, how arm's length commercial transactions should be protected from executive meddling, and how public rights should be preserved under the purview of national security.
Expect other lawsuits to follow the TikTok action that would deal with freedom of speech and social media issues. It is a can of worms that modern technological society had better deal with before things get worse, a lot worse.
If it does not challenge Trump legally, TikTok will lose everything and more. By challenging, it has already won, no matter what the legal outcome.
(The author is a retired international investment banker and certified public accountant. He graduated from Harvard University with a bachelor's degree in international relations and earned his MBA in finance from Columbia Business School.)