Thu, 16 March 2023 at 3:37 am GMT
The Biden administration has demanded that TikTok’s Chinese owners divest their stakes in the popular video app or face a possible US ban.
The move is the most dramatic in a series of recent steps by US officials and legislators who have raised fears that TikTok’s users’ data could be passed on to the Chinese government. ByteDance-owned TikTok has more than 100 million US users.
It is also the first time under Joe Biden’s administration that a potential ban on TikTok has been threatened. Mr Biden’s predecessor, Donald Trump, had tried to ban TikTok in 2020 but was blocked by US courts.
It comes after Tom Tugendhat, the security minister, earlier this week suggested the app could be banned in the UK.
TikTok spokesperson Brooke Oberwetter told Reuters that the company had recently heard from the US Treasury-led Committee on Foreign Investment in the United States (CFIUS), which demanded that the Chinese owners of the app sell their shares, and said otherwise they would face a possible US ban of the video app.
The move, which was first reported by The Wall Street Journal, was confirmed by ByteDance who said that 60 per cent of the company’s shares are owned by global investors, 20 per cent by employees and 20 per cent by its founders.
CFIUS, a powerful national security body, had unanimously recommended in 2020 that ByteDance divest TikTok. Under pressure from Mr Trump, ByteDance in late 2020 unsuccessfully sought to finalise a deal with Walmart and Oracle Corp to shift TikTok’s US assets into a new entity.
“If protecting national security is the objective, divestment doesn’t solve the problem: a change in ownership would not impose any new restrictions on data flows or access,” Ms Oberwetter said.
The White House declined to comment.
TikTok’s chief executive Shou Zi Chew is due to appear before Congress next week. It is not clear if the Chinese government would approve any divestiture and the Chinese embassy in Washington did not immediately respond to a request for comment.
Last month, the White House gave government agencies 30 days to ensure they do not have TikTok on federal devices and systems. More than 30 US states have also banned employees from using TikTok on government-owned devices.
Any US ban would face significant legal hurdles and potential political ramifications, since TikTok is popular with millions of young Americans.
Last week, Democratic Senator Mark Warner said it was important the US government does more to make clear what it believes are the national security risks from TikTok.
“It’s going to be incumbent on the government to show its cards in terms of how this is a threat,” Mr Warner said.
TikTok and CFIUS have been negotiating for more than two years on data security requirements. TikTok said it has spent more than $1.5 billion (£1.24 billion) on rigorous data security efforts and rejects spying allegations.
TikTok said on Wednesday that “the best way to address concerns about national security is with the transparent, US-based protection of US user data and systems, with robust third-party monitoring, vetting, and verification.”
Last week, the White House backed legislation by a group of senators to give the administration new powers to ban TikTok and other foreign-based technologies if they pose national security threats. It could give the Biden administration new ammunition in court if they sought to ban TikTok.
White House national security adviser Jake Sullivan praised the bipartisan bill, saying it “would strengthen our ability to address discrete risks posed by individual transactions, and systemic risks posed by certain classes of transactions involving countries of concern in sensitive technology sectors.”
The House of Representatives Foreign Affairs Committee this month voted along party lines on a much broader bill aimed at Tiktok that Democrats said would require the administration to effectively ban TikTok and other subsidiaries of ByteDance.