The Biden administration has threatened to ban TikTok if its Chinese owners do not sell their stake in the social media company to address growing national security concerns, according to two people familiar with the matter.
The Committee on Foreign Investment in the United States (Cfius) – an interagency panel that assesses foreign investment in the US – recently requested the exchange as part of its ongoing review into the company, which is owned by Beijing’s ByteDance. said.
TikTok, the popular short-form video app, has faced growing scrutiny over concerns that data it collects on American users may be sent to the Chinese government and Communist Party. While it has denied those claims, some Republican and Democratic senators have urged ByteDance to ban the app or divest its US arm. The Wall Street Journal first reported news of the demand.
According to people familiar with the matter, 60 percent of ByteDance’s shares are owned by global investors, while 20 percent are owned by employees and another 20 percent by its founders, including ByteDance’s current chief executives Zhang Yiming and Liang Rubo.
TikTok’s chief executive, Shou Zi Chew, is set to testify before the House Energy and Commerce Committee next week to discuss its data security practices as well as its relationship with China.
For two years, TikTok has been working on a national security deal with the US government in response to scrutiny. So far, TikTok has spent more than $1.5bn on “Project Texas”, a corporate restructuring plan to protect user data and content from Chinese influence by partnering with US cloud software group Oracle to meet Cfius requests.
However, negotiations over the deal have stalled in recent months. Last week, Senate Democrats and Republicans introduced a bill that would give the administration new powers to ban Chinese apps that pose security risks, including TikTok, which the White House has backed.
Following the sale demand, TikTok is evaluating its options but plans to continue working on the project in Texas, a person familiar with the situation said.
“If protecting national security is the objective, divestment does not solve the problem: a change in ownership will not impose any new restrictions on data flow or access,” TikTok said in a statement.
“The best way to address national security concerns is through transparent, US-based security of US user data and systems, with robust third-party monitoring, verification and verification, which we are already implementing.”
The Treasury Department, which leads Cfius, declined to comment.