The Biden administration has issued an ultimatum to the Chinese owners of TikTok, demanding they divest their ownership stakes in the popular video-sharing app or risk a potential ban in the United States, TikTok confirmed to Reuters on Wednesday.
Initially reported by the Wall Street Journal, this development marks a significant escalation in ongoing efforts by U.S. officials and lawmakers who are concerned about the possibility of the Chinese government accessing the data of TikTok’s more than 100 million U.S. users.
This is the first time under President Joe Biden’s administration that such a ban on TikTok has been suggested. Former President Donald Trump had attempted to prohibit TikTok’s operations in 2020, but his efforts were thwarted by court rulings.
According to TikTok spokesperson Brooke Oberwetter, the company was recently notified by the Committee on Foreign Investment in the United States (CFIUS) that its Chinese stakeholders must sell their shares or face a potential ban in the U.S.
The Journal reported that ownership of ByteDance, TikTok’s parent company, is divided among global investors (60%), employees (20%), and its founders (20%).
CFIUS had previously recommended in 2020, with unanimous support, for ByteDance to divest TikTok due to national security concerns.
“If the goal is to protect national security, divestment does not resolve the issue: simply changing ownership wouldn’t impose any new restrictions on data flows or access,” Oberwetter stated.
The White House has refrained from commenting on the situation.
TikTok’s CEO, Shou Zi Chew, is set to testify before Congress next week. It remains uncertain whether the Chinese government would endorse any potential divestment.
Proposals for a U.S. ban on TikTok would likely encounter substantial legal challenges.
For over two years, TikTok and CFIUS have been in discussions concerning data security protocols. The company reported it has invested over $1.5 billion in comprehensive security measures and strongly disputes allegations of espionage.
TikTok emphasized that “the optimal approach to address national security worries is through transparent, U.S.-based management of American user data and systems, alongside thorough third-party oversight and validation.”
Recently, the White House supported new legislation from a bipartisan group of senators aimed at granting the administration increased authority to ban TikTok and other foreign technologies deemed national security threats. This legislation could bolster the Biden administration’s case if it chooses to outlaw TikTok.
White House National Security Adviser Jake Sullivan commended the bipartisan measure, stating it “would enhance our ability to mitigate specific risks linked to particular transactions and broader threats associated with categories of transactions involving countries of concern in sensitive technology sectors.”
Earlier this month, the House of Representatives Foreign Affairs Committee voted along party lines on a bill proposed by Republican Representative Michael McCaul, which would empower Biden to impose a ban on TikTok.
© Thomson Reuters 2023
