Investors Sue Trump Administration Over Handling of TikTok Sale
Two investors have filed a federal lawsuit accusing federal officials of failing to enforce a law requiring TikTok to separate from its Chinese parent company, ByteDance. The case, filed March 5 in the U.S. Court of Appeals for the District of Columbia Circuit, argues the government allowed TikTok to continue operating in the United States despite a federal law aimed at addressing national security concerns over foreign ownership.
The lawsuit was brought by Zhaocheng Anthony Tan and Garrett Reid, two California-based software engineers who hold shares in Alphabet Inc. and Meta Platforms, the parent companies of YouTube and Instagram, which compete with TikTok. The case names President Donald Trump and Attorney General Pam Bondi in their official capacities as the federal officials responsible for enforcing the law. The filing was prepared with assistance from the Public Integrity Project, a legal organization focused on government accountability litigation.
The complaint alleges that the investors suffered financial losses because TikTok remained available in the U.S. market despite the statute’s divestiture requirement.
The lawsuit argues the sale of TikTok’s U.S. operations failed to meet the law’s divestiture requirements. According to the complaint, ByteDance retained ownership of TikTok’s recommendation algorithm and licensed it to the new American company instead of transferring it outright. The filing also says key operations, including advertising and e-commerce systems, remained tied to ByteDance subsidiaries and that a ByteDance executive sits on the board of the new entity.
At the center of the dispute is the Protecting Americans from Foreign Adversary Controlled Applications Act, a law passed by Congress in 2024 amid bipartisan concerns that TikTok’s Chinese ownership could expose sensitive user data or influence the content shown to American audiences. The law bars app stores and internet hosting services from distributing platforms controlled by foreign adversaries unless their U.S. operations are separated through what it calls a qualified divestiture, meaning control of the American business must be transferred to a domestic owner. Lawmakers said the rule was intended to prevent foreign governments from influencing the algorithms or data systems used by large social media platforms serving U.S. users.
TikTok and its parent company, ByteDance, challenged the statute in federal court. Still, the U.S. Court of Appeals for the District of Columbia Circuit upheld the law, and the Supreme Court later affirmed that ruling.
The statute required ByteDance to separate TikTok’s American operations from the Chinese company by January 2025. According to the lawsuit, that deadline passed without a completed divestiture. The president later issued executive orders delaying enforcement while negotiations over a possible sale continued.
In September 2025, the administration announced a framework for selling TikTok’s U.S. operations to a group of investors. The deal was finalized in January 2026 when a newly formed entity called TikTok USDS Joint Venture LLC agreed to acquire the platform’s American assets. The ownership group included Oracle, MGX, and affiliates of Susquehanna International Group and General Atlantic.
The lawsuit also challenges the administration’s authority to delay enforcement of the statute. The investors argue the president exceeded powers granted by Congress by issuing multiple extensions and directing federal officials not to enforce the law, a legal doctrine known as ultra vires. The filing further argues the Justice Department failed to carry out its responsibilities under the Administrative Procedure Act by declining to investigate potential violations of the statute.
The investors say those actions caused financial harm because they hold shares in companies that compete with TikTok for video traffic and advertising revenue. They ask the court to declare the extensions delaying enforcement of the TikTok law and the transaction creating the new U.S. entity unlawful and to order the Justice Department to investigate potential violations of the statute.
