You may have heard of Jukasa Speedway. If not, you may know the video sharing platform as TikTok. On October 16, 2019, the company filed for Chapter 11 bankruptcy protection. The following is a timeline of events leading up to, and including, that day:
October 16, 2019
TikTok, the viral video platform behind popular songs like “Miracle” and “Old Town Road”, filed for Chapter 11 bankruptcy protection. The company cited the continued decline of video sharing platforms like TikTok, along with the “overwhelming volume” of legal challenges as reasons for the move. The Chapter 11 filing will allow the company to continue operating as usual while it restructures its finances.
The move caught many by surprise. While TikTok is often credited with changing the online video game, its rise also sparked a debate about whether or not video platforms like it have the right to exist. Critics point to the “platform dependence” of many popular video games, arguing that it promotes addiction and undermines traditional game developers. (There are also questions about whether or not TikTok violates the terms of its own “no addiction” policy).
October 15, 2019 (2 days prior)
On October 15, 2019, just two days before the official filing of TikTok’s Chapter 11 petition, the company filed a lawsuit in the Northern District of California seeking to ban the use of the term “social media” altogether. The suit argues that the term is “impermissibly deceptive” and seeks to have the term “broadly construed to exclude all forms of social media, including TikTok”.
The lawsuit followed news reports that the company was “under siege” by government regulators, citing concerns over its data security. The company subsequently announced that it had hired a new chief security officer, a move it said was aimed at addressing “public concern over safety and privacy.”
October 15, 2019 (Prior to Filing)
In a move that many saw as a potential warning shot, TikTok co-founder and CEO Evan Spiegel filed a lawsuit against Spiegel Marketing Inc. on October 15, 2019. The suit accuses the marketing firm of misappropriation of trade secrets, inducing breach of contract and false advertising. Among other things, the suit alleges that the firm “improperly accessed” the social media platform and stole video ideas and techniques for its own benefit.
The move is notable for a couple of reasons. First, it shows that Spiegel is taking legal issues seriously. Second, the suit comes just weeks after the company filed for Chapter 11 bankruptcy protection. Third, and perhaps most significantly, the lawsuit claims that TikTok was designed “to appropriate and manipulate” user data. According to the lawsuit, the company has used “unauthorized means” to access customers’ personal information, including their GPS location, and records of their device and platform use. (The company also allegedly lied to customers about the security of their data, stating that it treated their personal information with the “highest security protocols” in an effort to “allure consumers into purchasing virtual goods” on the platform.)
September 17, 2019
A Virginia courtroom is no place for a fun afternoon, which is why Mark Wahlberg’s lawyer is scrambling to figure out a way to get his client out of court before the afternoon’s end. The morning started off with a bang when Mark’s entourage of bodyguards unexpectedly showed up and escorted him out of the courtroom.
“It was kind of strange,” says one of Wahlberg’s attorneys, Alan Gansfield. “It wasn’t like he has a history of being violent. He has four bodyguards with him, and we were all a little thrown by the situation.”
August 28, 2019
Last but not least, let’s not forget about TikTok’s legal tussle with Kodak. The company filed a lawsuit against the manufacturer of the popular photosensory game PhotoPass for infringing upon four of its patents. (The suit also names the individual who invented the game as a co-plaintiff.)
The patents in dispute cover “photo-related technology” and “systems and methods for processing and displaying images.” The legal dispute stems from an agreement that Kodak and TikTok came to in 2010. Under the agreement, the company receives licensing fees when the app is used to view and print photos. (Kodak is also the exclusive distributor of PhotoPass in Singapore.)
The lawsuit was filed in a Florida court and is one of many legal battles that TikTok is involved in. The company is also currently facing a class action lawsuit filed in December 2019 that alleges the company and its employees engaged in a racketeering conspiracy that illegally induced individuals to spend money on virtual goods on the platform. (In its defense, TikTok pointed out that the lawsuit is “filed by a company that earns over $5 billion per year in revenue from virtual goods.”)
The Implications of All of This
The news that three of TikTok’s biggest names have filed for bankruptcy protection is a stunning turn of events. The fallout from the Chapter 11 filings will be felt by many in the industry, not just in terms of the companies’ financial circumstances, but also in terms of the products they make and the research they conduct.
Spiegel Marketing Inc. filed a lawsuit against co-founder and CEO Evan Spiegel two days before the official filing of TikTok’s Chapter 11 petition. The company accused Spiegel of misappropriating trade secrets and inducing a breach of contract. The move is notable because it shows that Spiegel is taking legal issues seriously. He has also hired attorneys to help him with the case. (Spiegel also recently filed a lawsuit against an investor claiming that a “mutual friend” tried to extort him.)
Perhaps the biggest name to surface so far in relation to the bankruptcy filings is TikTok co-founder and CEO Evan Spiegel. The New York Times wrote that the Chapter 11 filing “is a stinging indictment” of the 37-year-old media mogul and social media pioneer, who is currently the subject of a lawsuit filed by Spiegel Marketing Inc. In the lawsuit, the company claims that Spiegel misappropriated trade secrets and induced a breach of contract. (Spiegel also recently filed a lawsuit against an investor claiming that a “mutual friend” tried to extort him.)
One of the biggest concerns for the video industry as a whole is how the coronavirus pandemic that began in China will impact the ability of customers to spend money online. (The company that owns Jukasa Speedway cited the pandemic as one of the reasons for its bankruptcy filing.) Just a few weeks after the coronavirus hit, eBay canceled more than 20 percent of its online sales. Just last week, Amazon announced that it expected its sales to fall by 30 percent in the second quarter of 2020 as a result of the pandemic. (This follows an earlier 14 percent drop in the first quarter of 2020.)
Whether or not the pandemic will prove to be a major blow to online commerce remains to be seen, but one thing is for sure: It’s changed the way we all consume content.