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`EXHIBIT 33
`EXHIBIT 33
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`Beth S. Brinkmann (SBN 129937)**
`bbrinkmann@cov.com
`Alexander A. Berengaut*
`aberengaut@cov.com
`Megan C. Keenan*
`mkeenan@cov.com
`COVINGTON & BURLING LLP
`850 Tenth Street, NW
`Washington, DC 20001
`Telephone: +1 (202) 662-6000
`Facsimile: + 1 (202) 778-6000
`
`John E. Hall (SBN 118877)
`jhall@cov.com
`Anders Linderot*
`alinderot@cov.com
`COVINGTON & BURLING LLP
`620 Eighth Avenue
`New York, New York 10018-1405
`Telephone: +1 (212) 841-1000
`Facsimile: + 1 (212) 841-1010
`
`Mitchell A. Kamin (SBN 202788)
`mkamin@cov.com
`Benjamin G. Cain (SBN 325122)**
`bcain@cov.com
`COVINGTON & BURLING LLP
`1999 Avenue of the Stars, Suite 3500
`Los Angeles, California 90067-4643
`Telephone: + 1 (424) 332-4800
`Facsimile: + 1 (424) 332-4749
`
`Attorneys for Plaintiffs
`
` *Pro hac vice application forthcoming
`**C.D. California admission forthcoming
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`WESTERN DIVISION
`TIKTOK INC. and BYTEDANCE LTD.,
`Case No. 2:20-cv-7672
`
`
`COMPLAINT FOR INJUNCTIVE
`Plaintiffs,
`AND DECLARATORY RELIEF
`
`
`
`v.
`
`DONALD J. TRUMP, in his official
`capacity as President of the United States;
`WILBUR L. ROSS, JR., in his official
`capacity as Secretary of Commerce; and
`U.S. DEPARTMENT OF COMMERCE,
`
`Defendants.
`
`
`
`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`Plaintiffs TikTok Inc. and ByteDance Ltd., for their Complaint against
`Defendants DONALD J. TRUMP, in his official capacity as President of the United
`States; WILBUR L. ROSS, JR., in his official capacity as Secretary of Commerce;
`and the U.S. DEPARTMENT OF COMMERCE; allege as follows:
`INTRODUCTION
`This action seeks to prevent the government from impermissibly
`1.
`banning TikTok, a mobile software application that 100 million Americans use to
`create and share short videos composed of expressive content. On August 6, 2020,
`President Trump issued an executive order banning this communication and
`information-sharing platform, without affording its owners—Plaintiffs TikTok Inc.
`and ByteDance Ltd.—due process of law and for political reasons rather than
`because of an “unusual and extraordinary threat” to the United States, which is a
`condition for the President to exercise his authority under the International
`Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. §§ 1701–1706. The
`President’s executive order is unconstitutional and ultra vires, and must be enjoined.
`IEEPA vests the President with significant power to prohibit certain
`2.
`transactions to protect U.S. national security. Past presidents have used this power
`responsibly to protect the country from genuine threats from abroad, including
`terrorism and the proliferation of weapons of mass destruction. Through this
`executive order, however, President Trump seeks to use IEEPA against TikTok Inc.,
`a U.S. company—headquartered in Los Angeles with hundreds of employees across
`the United States—to destroy an online community where millions of Americans
`have come together to express themselves, share video content, and make
`connections with each other. The order imposes these restrictions despite express
`limitations
`in IEEPA barring executive actions from restricting personal
`communications or the transmission of informational materials. The order also
`sweeps broadly to ban any transactions with TikTok Inc.’s parent company,
`ByteDance, even though the purported justification for the order is limited to the
`
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`TikTok mobile application (“TikTok”), which is just one of ByteDance’s several
`businesses. The order is thus a gross misappropriation of IEEPA authority and a
`pretext for furthering the President’s broader campaign of anti-China rhetoric in the
`run-up to the U.S. election.
`The executive order seeks to ban TikTok purportedly because of the
`3.
`speculative possibility that the application could be manipulated by the Chinese
`government. But, as the U.S. government is well aware, Plaintiffs have taken
`extraordinary measures to protect the privacy and security of TikTok’s U.S. user
`data, including by having TikTok store such data outside of China (in the United
`States and Singapore) and by erecting software barriers that help ensure that TikTok
`stores its U.S. user data separately from the user data of other ByteDance products.
`These actions were made known to the U.S. government during a recent U.S.
`national security review of ByteDance’s 2017 acquisition of a China-based
`company, Musical.ly. As part of that review, Plaintiffs provided voluminous
`documentation to the U.S. government documenting TikTok’s security practices and
`made commitments that were more than sufficient to address any conceivable U.S.
`government privacy or national security concerns—even going so far as to be
`prepared to spin-out the U.S. TikTok business to trusted American investors.
`Ignoring these demonstrable facts and commitments, President
`4.
`Trump’s executive order authorizes the Secretary of Commerce to prohibit “any
`transaction” with ByteDance and its subsidiaries, including banning TikTok from
`operating in the United States. It is revealing that the President’s order took no
`account of the national security review process involving the Committee on Foreign
`Investment in the United States (“CFIUS” or “the Committee”) that was still pending
`at the time of the executive order. Instead, the order was issued abruptly after the
`President had proclaimed in a campaign-style news conference that TikTok Inc. had
`“no rights” and that he would ban TikTok if Plaintiffs did not pay money to the U.S.
`Treasury to secure the U.S. government’s approval for any sale. The President stated
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`that he would use his IEEPA authority to force TikTok to “close down” unless it is
`acquired through “an appropriate deal” in which “the Treasury . . . of the United
`States gets a lot of money.”1
`The executive order and, necessarily, any implementing regulations are
`5.
`unlawful and unconstitutional for a number of independent reasons:
`• By banning TikTok with no notice or opportunity to be heard (whether
`before or after the fact), the executive order violates the due process
`protections of the Fifth Amendment.
`• The order is ultra vires because it is not based on a bona fide national
`emergency and authorizes the prohibition of activities that have not
`been found to pose “an unusual and extraordinary threat.”
`• The order is ultra vires because its prohibitions sweep broadly to
`prohibit any transactions with ByteDance, although the purported threat
`justifying the order is limited to TikTok, just one of ByteDance’s
`businesses.
`• The order is ultra vires because it restricts personal communications
`and the transmission of informational materials, in direct violation of
`IEEPA.
`• IEEPA lacks any intelligible principle to guide or constrain the
`President’s action and thereby violates the non-delegation doctrine, as
`the President’s overbroad and unjustified claim of authority in this
`matter confirms.
`• By demanding that Plaintiffs make a payment to the U.S. Treasury as a
`condition for the sale of TikTok, the President has taken Plaintiffs’
`property without compensation in violation of the Fifth Amendment.
`• By preventing TikTok Inc. from operating in the United States the
`
` 1
`
` Fadel Allassan, Trump says TikTok will be banned if not sold by Sept. 15, demands
`cut of sale fee, Axios (Aug. 3, 2020), https://www.axios.com/trump-tiktok-banned-
`microsoft-fd45748d-1ee8-4f4a-812a-09ec76d6f8e2.html.
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`executive order violates TikTok Inc.’s First Amendment rights in its
`code, an expressive means of communication.
`Accordingly, ByteDance and TikTok Inc. seek a declaratory judgment
`6.
`and order invalidating and enjoining the executive order and any implementing
`regulations issued by the Department of Commerce.2
`JURISDICTION AND VENUE
`The Court has subject matter jurisdiction under 28 U.S.C. § 1331
`7.
`because this action arises under the United States Constitution and the International
`Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. §§ 1701–1706.
`The Court has authority to grant declaratory and injunctive relief
`8.
`pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201 et seq.; 5 U.S.C. § 702;
`and the Court’s inherent equitable powers.
`Venue is proper in this district pursuant to 28 U.S.C. § 1391(e)(1),
`9.
`because officers or employees of agencies of the United States acting in their official
`capacities and an agency of the United States are defendants, because Plaintiff
`TikTok Inc. has its principal place of business in this district, and because a
`substantial part of the events or omissions giving rise to this action occurred in this
`district.
`
`PARTIES
`
`A. Plaintiffs
`10. Plaintiff TikTok Inc. is a company incorporated in California, with its
`principal place of business in Culver City, California.
`11. Plaintiff ByteDance Ltd. (“ByteDance”) is a global company
`incorporated in the Cayman Islands, with offices in the United States, China,
`Singapore, the United Kingdom, and India, among others. ByteDance owns and
`
` 2
`
` The order tasks the Department of Commerce with identifying the specific
`transactions to be banned by September 20, 2020, and with adopting rules and
`regulations as may be necessary to implement the order. Plaintiffs intend to amend
`this complaint pursuant to Fed. R. Civ. P. 15(a)(1)(A) and move for a preliminary
`injunction after the regulations are issued.
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`operates a variety of mobile software applications that enable people around the
`world to connect with, consume, and create entertainment content, including
`TikTok. ByteDance also owns and operates other applications that are available in
`the United States, such as CapCut, a video editing application, and Lark, a
`collaboration and communications software product.
`B. Defendants
`12. Defendant Donald J. Trump is the President of the United States.
`President Trump made the decision to ban TikTok and issue the August 6, 2020
`executive order, purportedly acting under authority of IEEPA.
`13. Defendant Wilbur T. Ross, Jr. is the Secretary of Commerce and is sued
`in his official capacity. President Trump’s executive order tasks Secretary Ross with
`identifying the transactions subject to the order and authorizes him to implement the
`order through regulations.
`14. The Department of Commerce is the cabinet department of the federal
`government responsible for implementing the executive order.
`FACTUAL ALLEGATIONS
`TikTok’s Global Success Has Resulted From Private-Sector
`Entrepreneurial Innovation.
`
`I.
`
`15. TikTok is an inclusive communication platform for making and sharing
`short-form videos through the TikTok mobile application. It encourages users to
`celebrate what makes them unique, while finding a community that does the same.
`TikTok Inc.’s mission is to inspire creativity and bring joy. It strives to build a global
`community, in which users can create and share authentically, discover the world
`around them, and connect with others across the globe.3
`16. The TikTok application enables users to create and upload short videos
`that are fifteen seconds to one minute in duration. In this respect, TikTok operates
`
` 3
`
` TikTok, Our Mission, https://www.tiktok.com/about?lang=en (last visited Aug.
`21, 2020).
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`much like other digital application platforms such as Snapchat, YouTube, and
`Instagram, in that users create and post content on the platform. TikTok offers
`features such as background music and augmented reality effects, but users control
`which features to pair with the content of their self-directed videos, and TikTok
`serves as a host for the content created by its users.
`17. The TikTok application began as a product of private-sector
`entrepreneurship. In 2012, 29-year-old entrepreneur Yiming Zhang founded TikTok
`Inc.’s parent corporation, ByteDance. ByteDance is owned by Zhang and a number
`of major global institutional investors based in the United States, including Sequoia,
`General Atlantic, Coatue, and SIG. No foreign government, or person controlled by
`or acting on behalf of a foreign government, owns any significant interest or any
`other affirmative or negative rights or powers in ByteDance.
`18. Since founding ByteDance, Zhang has developed multiple products and
`services, including TikTok, many of which are operated through subsidiaries and
`affiliates—such as TikTok Inc. in the United States. TikTok is not offered in China,
`where ByteDance operates a similar but separate video-sharing platform called
`Douyin.
`19. TikTok’s user base has grown at a rapid pace in the United States. By
`January 2018, TikTok had 11,262,970 U.S. monthly active users. By February 2019,
`TikTok’s base more than doubled, with a total of 26,739,143 U.S. monthly active
`users. By October of that same year, TikTok’s total number of U.S. monthly active
`users had climbed to 39,897,768. And by June 2020, TikTok’s total number of U.S.
`monthly active users had soared to 91,937,040. Today, based on quarterly usage,
`100 million Americans use the TikTok application.
`20. TikTok’s growth in the United States paralleled its expansion
`worldwide. By January 2018, TikTok had 54,793,729 global monthly active users.
`By December of that year, TikTok had 271,188,301 global monthly active users.
`And one year later, in December 2019, TikTok had 507,552,660 global monthly
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`active users. As of July 2020, TikTok had 689,174,209 global monthly active users,
`and by August 2020, TikTok surpassed two billion global downloads.
`21. As a result of its rapid growth and success, TikTok has become
`available in more than 200 countries, and it currently has approximately 50 million
`daily active users in the United States. TikTok has grown largely because of its
`appeal to those who value the blend of light entertainment, creativity, and humor
`that the application provides.
`22. TikTok is also used by its users to discuss more serious subjects,
`including political issues. “Society’s struggles are on full display in TikTok,”
`including in the many posts about “the tragic death of George Floyd[,] LGBTQ
`awareness[,] and tributes to healthcare workers [] who are on the frontlines of
`COVID-19.”4 As of August 24, 2020, TikTok users had amassed approximately 6.8
`million views of posts with the hashtag #RIPJohnLewis, 230.3 million views of posts
`about #Juneteenth, and 20.3 billion views of posts about #BlackLivesMatter. 5
`Prominent TikTok users like Sarah Cooper have attracted millions of views based
`on posts that satirize the President, as have posts with hashtags such as
`#MakeAmericaGreatAgain and #BuildThatWall.6 And TikTok users claimed they
`used TikTok to coordinate mass ticket reservations for the President’s re-election
`
` 4
`
` Gene Del Vecchio, TikTok Is Pure Self-Expression. This Is Your Must-Try
`Sampler., Forbes (June 6, 2020), https://www.forbes.com/sites/genedelvecchio/
`2020/06/06/tiktok-is-pure-self-expression-this-is-your-must-try-
`sampler/#4e40f1f15a09.
`5 TikTok, #RIPJohnLewis, https://www.tiktok.com/tag/RIPJohnLewis?lang=en
`(last visited Aug. 24, 2020); TikTok, #Juneteenth, https://www.tiktok.com/
`tag/Juneteenth?lang=en (last visited Aug. 24, 2020); TikTok, #BlackLivesMatter,
`https://www.tiktok.com/tag/BlackLivesMatter?lang=en (last visited Aug. 24, 2020).
`6 Charles Trepany, Who is Sarah Cooper? Viral Trump Impersonator appears at
`DNC, bags TV specials, USA Today (Aug. 20, 2020), https://www.usatoday.com/
`story/entertainment/celebrities/2020/07/21/trump-impersonator-sarah-cooper-
`reflects-viral-social-media-stardom/5483534002/; TikTok, #MakeAmericaGreat
`Again, https://www.tiktok.com/tag/MakeAmericaGreatAgain?lang=en (last visited
`Aug. 23, 2020) (approximately 104.5 million views); TikTok, #BuildThatWall,
`https://www.tiktok.com/tag/BuildThatWall?lang=en (last visited Aug. 23, 2020).
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`campaign rally in Tulsa, which inflated projected attendance in the days leading up
`to the event.7 Several American politicians are verified users on TikTok, including
`Governor Michael DeWine of Ohio, Senator Ed Markey of Massachusetts, Governor
`Gavin Newsom of California, and Senator Bernie Sanders of Vermont.
`23. TikTok is an economic lifeline for many of its users, especially during
`the COVID-19 pandemic. TikTok has given rise to new, non-traditional social
`media celebrities—“many of them working-class folks . . . in villages far from []
`cosmopolitan megacities”—and has become “a livelihood for some people,”
`providing “fame, empowerment and even a path out of poverty.”8
`II. TikTok Has Implemented Safeguards to Help Protect the Privacy and
`Security of U.S. User Data.
`
`24. Maintaining a safe and supportive environment for its users is a critical
`priority for Plaintiffs. TikTok’s business model rests on the principle that a safe
`environment is essential to helping people feel comfortable with expressing
`themselves openly and creatively. Plaintiffs also aim to cultivate an environment
`for authentic interactions by working to keep deceptive content and accounts off
`TikTok.
`25. TikTok has been structured to help protect the privacy and security of
`U.S. user data. Those protections begin with TikTok’s practices in collecting user
`data. TikTok collects limited data from its users in accordance with its privacy
`policy.9 For user data that is collected, TikTok prioritizes its secure storage. The
`current version of TikTok made available in the United States (i.e., the version
`
` 7
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` Taylor Lorenz et al, TikTok Teens and K-Pop Stans Say They Sank Trump Rally,
`N.Y. Times (July 11, 2020), https://www.nytimes.com/2020/06/21/style/tiktok-
`trump-rally-tulsa.html.
`8 Sushmita Pathak, ‘TikTok Changed My Life’: India’s Ban On Chinese App Leaves
`Video Makers Stunned, NPR (July 16, 2020), https://www.npr.org/2020/
`07/16/890382893/tiktok-changed-my-life-india-s-ban-on-chinese-app-leaves-
`video-makers-stunned.
`9 TikTok, Privacy Policy (last updated Jan. 1, 2020), https://www.tiktok.com/
`legal/privacy-policy?lang=en.
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`principally affected by Defendant’s unlawful ban and the version on which this
`complaint focuses) stores all U.S. user data on servers in the United States and
`Singapore, where it is segregated from data relating to other ByteDance products
`and services by software-based controls. TikTok does not store any U.S. user data
`in China.
`26. While it is in storage, the following U.S. user data is currently encrypted
`using the industry-standard key management service (“KMS”) encryption algorithm
`(AES 256 GCM), which is operated by TikTok’s U.S. security team: names,
`birthdays, home addresses, phone numbers, emails, passwords, PayPal account
`information, contact list, private videos, direct messages, and certain fields of the
`log-in history.
`27. The KMS algorithm also generates secret keys required to access
`encrypted data, and these keys are managed by the U.S. security team, under the
`control and direction of Roland Cloutier, the U.S.-based Global Chief Security
`Officer. ByteDance’s China-based engineering personnel supporting TikTok may
`access these encrypted data elements in decrypted form based on demonstrated need
`and if they receive permission under the Data Access Approval Process, which is
`managed by TikTok’s U.S.-based team.
`28. TikTok has additional internal controls in place to prevent keys that
`decrypt U.S. user data from being accessed by ByteDance personnel without
`authorization from the U.S. security team. TikTok regularly conducts code audits
`and internal reviews of access to data to help ensure that no unauthorized access to
`U.S. user data takes place, and it has not identified any purposeful breach of security
`controls.
`In addition to its storage security practices, TikTok takes steps to secure
`29.
`and encrypt user data while it is being transmitted. TikTok currently uses Hypertext
`Transfer Protocol Secure (“HTTPS”) by default for transmission of user data in the
`United States, the same industry-standard protocol used by major U.S. banks and
`
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`e-commerce platforms to secure their online transactions.
`30. TikTok is committed to continually strengthening its data privacy
`policies to protect its users, to maintain sponsors’ trust, and to comply with
`applicable legal and regulatory standards. TikTok regularly reviews its security
`protections to identify and remediate any potential vulnerabilities. This is part of a
`mature software development lifecycle program that involves both automatic and
`manual review of security controls at multiple points in the development process.
`TikTok also has a vulnerability reporting policy that invites security researchers to
`disclose information about vulnerabilities,10 and it relies on respected American
`third-party vendors to validate its security controls and help ensure that U.S. user
`data is not subject to security vulnerabilities.
`In addition to safeguarding TikTok user data against data breaches,
`31.
`hackers, and other malicious actors, TikTok has security controls designed to protect
`the integrity of its source code. For example, employees must demonstrate a need
`for information before they can access TikTok source code. Even upon a showing
`of such a need, the employee still must obtain appropriate authorization to access the
`source code, and security controls embedded in the network monitor the employee’s
`review and activities. TikTok has also repeatedly engaged internal engineers and
`third-party vendors to perform quality and security checks and conduct intensive
`code reviews to help ensure that no back doors exist in TikTok’s source code.
`32. TikTok has reinforced its commitment to prioritizing the privacy and
`security concerns of U.S. users by placing U.S.-based executives in key leadership
`positions that shape the direction of the company. TikTok is led by a senior
`management team located in the United States. Its Chief Executive Officer, General
`Manager, Global Chief Security Officer, U.S. Head of Safety, and General Counsel
`
`
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`10 TikTok, Report Security Vulnerabilities, https://support.tiktok.com/en/privacy-
`safety/reportsecurityvulnerabilities-default#:~:text=Coordinated%20Disclosure%
`20Policy%20as%20defined,submission%2C%20whichever%20is%20sooner.%22.
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`Case 2:20-cv-07672-ODW-MAA Document 1 Filed 08/24/20 Page 12 of 39 Page ID #:12Case 6:20-cv-00810-ADA Document 28-33 Filed 12/10/20 Page 13 of 40
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`are all U.S.-based persons. These U.S.-based leaders came to TikTok from
`leadership positions in prominent U.S. companies like the Walt Disney Company,
`ADP, YouTube, and Microsoft.11
`33. TikTok Inc. has broadened its commitment to hiring U.S. personnel
`beyond the highest levels of leadership as well, including by hiring dozens of highly
`qualified individuals with experience at leading U.S. technology companies. TikTok
`has also established a fully staffed content moderation team in the United States to
`oversee all content moderation decisions for U.S. users. And Plaintiffs have
`announced plans to add approximately 10,000 jobs in the United States over the next
`three years.12
`34. TikTok’s U.S.-based leadership team has consistently stressed its
`commitment to prioritizing U.S. data privacy and security.13 Most recently, on July
`29, 2020, TikTok announced the launch of its Transparency and Accountability
`Center for moderation and data practices, which will enable experts to “observe our
`moderation policies in real-time, as well as examine the actual code that drives our
`algorithms.” As the announcement explained, this act of transparency is
`unparalleled by other major social media companies and “puts [TikTok] a step ahead
`of the industry.”14
`35. As these efforts reflect, Plaintiffs are committed to appropriately
`safeguarding U.S. user data against unauthorized access from outside the United
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`11 Brooks Barnes & Jack Nicas, Disney’s Head of Streaming Is New TikTok C.E.O.,
`N.Y.
`Times
`(May
`18,
`2020),
`https://www.nytimes.com/2020/05/18/
`business/media/tiktok-ceo-kevin-mayer.html.
`12 Reuters, TikTok plans to add 10,000 jobs in U.S. over next three years (July 21,
`2020), https://www.reuters.com/article/us-tiktok-jobs/tiktok-plans-to-add-10000-
`jobs-in-u-s-over-next-three-years-idUSKCN24M1S9.
`13 Vanessa Pappas, Explaining TikTok’s approach in the US, TikTok (Nov. 5, 2019),
`https://newsroom.tiktok.com/en-us/explaining-tiktoks-approach-in-the-us.
`14 Kevin Mayer, Fair competition and transparency benefits us all, TikTok (July 29,
`2020),
`https://newsroom.tiktok.com/en-us/fair-competition-and-transparency-
`benefits-us-all.
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`Case 2:20-cv-07672-ODW-MAA Document 1 Filed 08/24/20 Page 13 of 39 Page ID #:13Case 6:20-cv-00810-ADA Document 28-33 Filed 12/10/20 Page 14 of 40
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`States—including by any foreign government. TikTok is not and has never been
`offered in China. There is no connection between TikTok and the Chinese
`government. Nor does the Chinese government exert any control over TikTok Inc.
`through its parent company, ByteDance. The key personnel responsible for TikTok,
`including its CEO, Global Chief Security Officer, and General Counsel, are all
`Americans based in the United States—and therefore are not subject to Chinese law.
`U.S. content moderation is likewise led by a U.S.-based team and operates
`independently from China, and, as noted above, the TikTok application stores U.S.
`user data on servers located in the United States and Singapore.
`36. Neither TikTok Inc. nor ByteDance provides TikTok user data to the
`Chinese government, and the Chinese government has never asked for data on
`TikTok users or to moderate TikTok content. Plaintiffs would reject any such
`request.
`III. Plaintiffs Proactively Engaged with the U.S. Government and Sought to
`Address Any Conceivable National Security Concerns.
`
`37. As the foregoing reflects, as TikTok has grown, it has continued to
`refine and strengthen its data privacy protections and has done so voluntarily,
`reflecting its ongoing commitment to U.S. users. As part of these efforts, Plaintiffs
`have also sought proactively to engage with the U.S. Government to anticipate and
`address any concerns it might have. These efforts have included responding
`separately and diligently to inquiries from CFIUS.
`38. CFIUS is the regulatory body tasked with reviewing foreign
`acquisitions of U.S. businesses to determine their impact on national security.
`CFIUS reviews transactions to identify and address any unresolved national security
`concerns they might pose to the United States. If CFIUS identifies such a risk that
`cannot be adequately and appropriately addressed by other legal authorities, the
`Committee or a lead agency may, on behalf of the Committee, negotiate, enter into
`or impose, and enforce any agreement or condition with any party to the covered
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`COMPLAINT FOR INJUNCTIVE AND DECLARATORY RELIEF
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`Case 2:20-cv-07672-ODW-MAA Document 1 Filed 08/24/20 Page 14 of 39 Page ID #:14Case 6:20-cv-00810-ADA Document 28-33 Filed 12/10/20 Page 15 of 40
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`transaction in order to mitigate any risk to the national security of the United States
`that arises as a result of the covered transaction. Under its governing statute, CFIUS
`may refer a transaction to the President if CFIUS is unable to identify adequate and
`appropriate mitigation, i.e., mitigation measures that it believes (a) can successfully
`address the identified risk, (b) allow for verifiable compliance, and (c) can be
`effectively monitored and enforced, consistent with the requirements of 50 U.S.C.
`§ 4565(l)(3)(C). The President is ultimately empowered to prohibit covered
`transactions that pose threats to national security that cannot be adequately and
`appropriately addressed through other authorities.
`In 2019, CFIUS contacted ByteDance to consider whether to review its
`39.
`acquisition of Musical.ly, a China-based video-sharing platform—even though
`Musical.ly was based in China and had very limited assets in the United States. This
`review was highly unusual in that ByteDance had acquired Musical.ly two years
`earlier in 2017, Musical.ly was previously Chinese-owned and based in China, and
`ByteDance had predominantly abandoned Musical.ly’s limited U.S. assets by the
`time of CFIUS’s outreach in 2019. Nevertheless, in March 2020, after months of
`evaluating its jurisdiction, CFIUS advised ByteDance that it intended to conduct a
`formal review