Universal Music says that it will pull its song catalog from TikTok tomorrow at midnight, as the companies are unable to reach a deal on rights. Huge implications.

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No, they just put it as background music in their videos, but didn't actually pay for it. I would guess it constitutes fair use?

No

Fair use is context based. There is no simple yes or no answer.

In this case there is. Background music is not fair use.