A U.S. federal appeals court on Friday upheld a law requiring Chinese-based ByteDance to divest its popular short-video app TikTok in the United States by early next year or face a ban.

The ruling could be appealed to the Supreme Court or full appeals court panel.

U.S. Court of Appeals judges Sri Srinivasan, Neomi Rao, and Douglas Ginsburg considered the legal challenges brought by TikTok and users against the law that gives ByteDance until Jan. 19 to sell or divest TikTok's U.S. assets or face a ban.

"The multiyear efforts of both political branches to investigate the national security risks posed by the TikTok platform — and to consider potential remedies proposed by TikTok — weigh heavily in favor of the Act," the court said in its decision.

President Joe Biden, who signed the law in April, can grant a one-time extension of up to 90 days, but only if ByteDance has made significant progress in finding a buyer.

The Justice Department says under Chinese ownership, TikTok poses a serious national security threat because of its access to vast personal data of Americans, asserting China can covertly manipulate information that Americans consume via TikTok.

TikTok and ByteDance argue the law is unconstitutional and violates Americans' free speech rights. They call it "a radical departure from this country's tradition of championing an open internet."

President-elect Donald Trump, who unsuccessfully tried to ban TikTok during his first term in 2020, said before the November elections, he would not allow the ban on TikTok, which is used by 170 million Americans.

The law prohibits app stores like Apple and Alphabet's Google from offering TikTok and bars internet hosting services from supporting TikTok unless ByteDance divests TikTok by the deadline.

U.S. officials have warned TikTok's management is beholden to the Chinese government, which could compel the company to share the data of its U.S. users.

TikTok has denied that it has or ever would share U.S. user data, accusing American lawmakers in the lawsuit of advancing "speculative" concerns.