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(CN) — American investors seeking to acquire TikTok’s U.S. operations claim in a federal lawsuit filed Wednesday that the social media app’s Chinese owners are violating Florida racketeering laws.
The plaintiff investors say they formed TikTok Global in September 2020 as a divestment solution, offering $33.3 billion to allay national security concerns and purchase the popular social media app from Chinese internet company ByteDance.
In their complaint filed Tuesday, they claim ByteDance, its CEO Zhang Yiming, TikTok and Beijing Telecommunications worked as a coordinated entity that conspired to maintain control, despite a federal law that bans the app in the country unless it’s severed from its Beijing-based owner.
It claims they engaged in interrelated unlawful activities such as interstate mail and wire fraud by forwarding TikTok Global’s emails and other private communications to defraud government regulators.
A similarlawsuit was filed in April, but voluntarily dismissed the following month. The Miami-based Reiner & Reiner firm said Wednesday it did so because new information and evidence became available for review days before TikTok Global was required to respond to the defendants’ motion to dismiss.
This new evidence included a public statement from U.S. Representative Brad Sherman last month that ByteDance, Beijing Telecom and their controlled affiliate GD Culture Group bought $300 million worth of President Donald Trump’s cryptocurrency “meme coin.” TikTok Global argues that this shows the companies were paying bribes.
TikTok denied the claim in a tweet on June 19.
Beijing Telecom was added as a defendant and is accused of directing its affiliates and subsidiaries like ByteDance to sidestep strict requirements for foreign investments in U.S. businesses by “offering a sophisticated partnership to surveil and recover mass American data, further bolstered by cloud storage with tech giants Oracle and Microsoft, and retailer Walmart.”
TikTok declined to comment on the new case. In response to the first lawsuit, it filed a motion to dismiss, claiming TikTok Global did not exist in 2020 and that the company was not formed until this year. It argues its chief executive Brad Greenspan, an internet entrepreneur who helped launch Myspace, has been declared a “vexatious litigant” by a California federal judge due to his history of filing numerous “frivolous motions” in a case against Google.
After proposing its purchase agreement, TikTok Global says it discovered Beijing Telecoms and ByteDance had other plans to circumvent proper procedures, stifle competition, and maintain their control over TikTok’s U.S. operations — all under the guise of compliance with Trump’s 2020 executive order.
“This set the stage for what should have been a straightforward process of acquisition and divestment, but instead, it became a twisted tale of corporate intrigue, conspiracy and antitrust violations that continues to this day,” TikTok Global said in its complaint, filed in federal court in Florida.
The investors claim TikTok’s owners orchestrated an overarching conspiracy beginning in 2019 to manipulate and maintain leadership positions in the U.S. online video and social networking markets.
The plaintiffs also accuse TikTok’s owners of engaging in a fraudulent scheme to harvest U.S. consumer data and transfer it to China for economic and political reasons.
Chinese executives conspired with American cloud server providers to undermine any U.S. legal ban requiring ByteDance to divest its TikTok subsidiary to American majority ownership, TikTok Global says in the suit.
“At the center of the conspiracy was the unlawful manipulation of the Committee on Foreign Investment in the United States, enabled by secret agreements between technology companies and facilitated through meetings where illegal deals were negotiated,” TikTok Global says.
After proposing its acquisition agreement and divestiture strategy, which had been certified with the committee, the group said ByteDance conveyed its confidential trade secrets and certification to cloud storage tech giant Oracle.
Beijing Telecommunications ordered ByteDance and other operatives to usurp the TikTok Global brand under false pretenses, the plaintiffs say, in order to remove them as the only viable timely buyer with the required approval and undermine the government’s efforts to enforce the ban.
They also claim ByteDance coordinated with former U.S. Secretary of the Treasury Steven Mnuchin to outmaneuver the committee’s review process and ensure Oracle’s selection as the “trusted technology partner.”
“The plaintiff’s investment of time and effort was fueled by an expectation: that upon gaining CFIUS certification, its name, brand, and ‘TikTok Global’ divestment strategy would proceed,” the investors say in the lawsuit.
ByteDance sought to maintain control over TikTok’s U.S. operations by conspiring to reject the group’s legitimate acquisition offers, misappropriating its corporate identity and engaging in anticompetitive conduct, they claim.
“By orchestrating these charades, ByteDance continues to maintain their grip on TikTok by erecting insurmountable barriers to entry, stifling any legitimate acquisition offers that dare challenge their dominion,” the plaintiffs say.
TikTok Global also accuses ByteDance of not registering lobbying activities in a timely manner, which it argues violates laws aimed at protecting the American public from corruption in U.S. politics and the influence of companies controlled by foreign governments.
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