TikTok Deal Faces Legal Challenge Over Alleged Violations of National Security Law

A lawsuit filed on March 5, 2026, alleges that former President Donald Trump and former Attorney General Pam Bondi improperly handled the deal to avert a ban of the popular video-sharing app TikTok, potentially violating federal law and subverting the will of Congress. The suit, brought by shareholders of competing tech firms Alphabet and Meta Platforms, claims the agreement failed to adequately address national security concerns related to TikTok’s Chinese parent company, ByteDance.

The Lawsuit’s Core Arguments

The plaintiffs, Zhaocheng Anthony Tan (Alphabet shareholder) and Garrett Reid (Meta Platforms shareholder), argue that the deal approved by Trump in January allowed TikTok to continue operating in the U.S. Without fully severing its ties to ByteDance. They contend that Trump granted unlawful extensions to the deadline for ByteDance to divest TikTok, as mandated by the Protecting Americans from Foreign Adversary Controlled Applications (PAFACA) Act. The lawsuit further alleges that Bondi failed to investigate potential breaches of the law.

Details of the Trump-Backed Deal

In January, Trump backed the launch of The Joint Venture LLC, a U.S.-majority owned board with an 80.1% stake, while ByteDance retained 19.9%. However, the lawsuit claims this structure is insufficient to prevent ByteDance from continuing to exert control over TikTok’s operations, including its algorithm and content moderation policies. According to the plaintiffs, the American entity does not actually own the app’s algorithm but instead collaborates with ByteDance, violating the statutory ban on algorithmic cooperation. ByteDance retains ownership and licensing of the algorithm, while TikTok U.S. Will only “retrain, test, and update” it using U.S. User data.

Allegations Against Trump and Bondi

The lawsuit specifically accuses Trump of exceeding the statutory limits on extensions granted under PAFACA. The law allows for a single extension of up to 90 days, but the suit alleges Trump approved five extensions totaling over 400 days. The plaintiffs claim Trump directed Bondi not to investigate or enforce violations of PAFACA, a direct contravention of the act’s provisions.

Financial Impact on Competitors

The shareholders also assert that the delayed enforcement of PAFACA financially harmed investors in Alphabet and Meta, as their stock prices declined upon the announcement of the deal. Specifically, Alphabet’s stock dropped from $330.84 to $328.43, and Meta’s stock fell from $760.66 to $748.91 when the framework was initially announced in September 2025.

Republican Concerns and Supreme Court Ruling

The deal has faced criticism from both sides of the political spectrum. Republican Senators Tom Cotton and Pete Ricketts have voiced opposition to Trump’s approach to TikTok. The Supreme Court upheld a law passed by Congress requiring ByteDance to sell TikTok, citing national security concerns.

Looking Ahead

This lawsuit adds another layer of complexity to the ongoing saga of TikTok’s future in the United States. The outcome of the case could have significant implications for the app’s operations, its relationship with ByteDance, and the broader debate over data security and foreign influence in the digital realm.