Montana Governor Greg Gianforte signed legislation on Wednesday prohibiting Chinese-owned TikTok from functioning in the state under the pretext of safeguarding people from alleged Chinese intelligence collection, making Montana the first US state to do so.

In March, Forbes reported that the banning of TikTok in the US could leave a market worth around $431 billion to be tapped by three American tech giants as Washington's pressure mounts over the social media app, a Bernstein report revealed. 

Last year, the app came under severe attack from within the Democratic and Republican parties and was called a "surveillance tool" for China.

Montana will make it illegal for Google and Apple's app shops to sell TikTok in the state but will not penalize users who use the software. The prohibition is set to go into force on January 1, 2024, and it is almost guaranteed to encounter judicial challenges.

TikTok, which is owned by the Chinese tech giant ByteDance, did not reply to a Reuters inquiry about legal action.

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TikTok previously made a statement claiming that the new legislation "infringes on the First Amendment rights of the people of Montana by unlawfully banning TikTok" and promising to "continue working to defend the rights of our users inside and outside of Montana."

It has received increasing requests from politicians and state authorities in the United States to ban the app statewide due to worries about alleged Chinese government control over the network.

According to the Pew Research Center, 67% of 13- to 17-year-olds in the United States use TikTok, while 16% of all adolescents use the app fairly daily. According to TikTok, the vast majority of its users are over the age of 18.

In March, TikTok CEO Shou Zi Chew was interrogated by a congressional committee about whether the Chinese government could access user data or affect what Americans saw on the platform. However, efforts to prohibit TikTok nationwide or to give the Biden administration greater powers to crack down on or ban TikTok have failed to gain traction in Congress.

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The bill, according to Gianforte, will advance "our shared priority to protect Montanans from Chinese Communist Party surveillance."

TikTok has constantly denied sharing data with the Chinese government and has stated that it would not do so if requested.

TikTok may face fines of $10,000 per day if it violates the restriction in Montana, which has a population of little more than 1 million people. The short video app is available in the app stores of Apple Inc (AAPL.O) and Google smartphones.

If Apple and Google, a subsidiary of Alphabet Inc (GOOGL.O), break the restriction, they might face fines of $10,000 per infraction, per day. Apple and Google did not react quickly to calls for comment.

The American Civil Liberties Union (ACLU) called the measure "unconstitutional", noting that it will take effect on January 1 if the courts do not intervene.

Keegan Medrano, policy director at the ACLU of Montana, stated that the ban tramples on free speech in the "name of anti-Chinese sentiment."

Former President Donald Trump's effort to restrict new TikTok and WeChat downloads through a Commerce Department directive in 2020 was stopped by numerous courts and never went into force.

Several Democratic members of Congress, including Representative Alexandria Ocasio-Cortez, and First Amendment organizations such as the American Civil Liberties Union are among TikTok's free speech supporters.

Carl Szabo, general counsel for the industry association NetChoice, also attacked the new regulation. "The government may not block our ability to access constitutionally protected speech - whether it is in a newspaper, on a website or via an app." he said in a statement, adding that Montana "ignores the United States Constitution, due process, and free speech."

Gianforte, who had attempted to persuade the state legislature to broaden the ban to include other social media apps that provide specific data to foreign adversaries, also prohibited the use of all social media apps that collect and provide personal information or data to foreign adversaries on state government-issued devices.

TikTok is working on Project Texas, which would form a separate corporation to keep American user data in the United States on servers run by the American tech firm Oracle (ORCL.N).