TikTok could face U.S. ban if Chinese owners don’t divest, company says

The Biden administration is demanding that TikTok owner TikTok divest its stake in the popular video app or face a US ban, the company told Reuters on Wednesday.

The move, first reported by the Wall Street Journal, is the most dramatic in a series of recent moves by US officials and lawmakers who fear TikTok’s US user data could be passed on to the Chinese government. ByteDance-owned TikTok has more than 100 million US users.

This is the first time in the administration of US President Joe Biden that a potential ban on TikTok has been threatened. Biden’s predecessor, Donald Trump, tried to ban TikTok in 2020 but was blocked by the courts.

TikTok spokeswoman Brooke Oberwetter told Reuters that the company recently heard from the US Treasury-led Committee on Foreign Investment in the United States (CFIUS), which demanded that the Chinese app’s owner sell its shares, and said it would not. , they will face a US ban from the video app.

The Journal said 60 percent of ByteDance’s shares are owned by global investors, 20 percent by employees and 20 percent by the founders.

Past divestment proposals

CFIUS, the powerful national security body in 2020 unanimously recommended that ByteDance remove TikTok.

“If protecting national security is the goal, divestment does not solve the problem: a change in ownership will not impose new restrictions on data flow or access,” Tiktok’s Oberwetter said in a statement.

The White House declined to comment.

TikTok Chief Executive Officer Shou Zi Chew will appear before the US Congress next week. It is unclear whether the Chinese government will approve the divestment.

Any US ban would face significant legal hurdles.

TikTok denies spying allegations

TikTok and CFIUS have been negotiating for more than two years on data security requirements. The video app company said it had spent more than $1.5 billion on strict data security efforts and denied allegations of spying.

TikTok said on Wednesday that “the best way to address national security concerns is with transparent, US-based user data protection and systems, with robust third-party monitoring, vetting and verification.”

Last week, the White House backed legislation by dozens of senators to give the administration new powers to ban TikTok and other foreign-based technologies if they pose a national security threat.

It could give the Biden administration new ammunition in court if it seeks to ban the app.

White House National Security Adviser Jake Sullivan praised the bipartisan bill, saying it “will strengthen our ability to address the discrete risks posed by individual transactions, and the systemic risks posed by certain classes of transactions involving countries of concern in the sensitive technology sector.”

The US House Foreign Affairs Committee this month voted along party lines on a bill sponsored by Republican Representative Michael McCaul to give Biden the power to ban TikTok.