TikTok says US threatens to ban if Chinese owners don’t sell their stakes By Reuters

By Echo Wang and David Shepardson

WASHINGTON (Reuters) – The Biden administration has demanded that the Chinese owners of TikTok divest their stakes in the popular video app or face a possible ban in the United States, the company told Reuters on Wednesday.

The move is the most dramatic in a series of recent moves by US officials and lawmakers who have raised fears that data from US TikTok users could be passed on to the Chinese government. TikTok, owned by ByteDance, has more than 100 million users in the US.

It is also the first time under the administration of Democratic President Joe Biden that a possible ban on TikTok has been threatened. Biden’s predecessor, Republican Donald Trump, had tried to ban TikTok in 2020, but was blocked by US courts.

TikTok spokeswoman 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 app’s Chinese owners sell their actions and said they would otherwise face a possible US ban on the video app.

The Wall Street Journal was the first to report on the move. ByteDance confirmed that 60% of its shares are owned by global investors, 20% by employees and 20% by its founders.

CFIUS, a powerful national security body, unanimously recommended in 2020 that ByteDance get rid of TikTok. Under pressure from then-President Trump, ByteDance in late 2020 unsuccessfully attempted to finalize a deal with Walmart (NYSE:) and oracle company (NYSE:) to switch TikTok’s US assets to a new entity.

“If the goal is to protect national security, divestment does not solve the problem: a change in ownership would not place new restrictions on data flows or access,” Tiktok’s Oberwetter said in a statement.

The White House declined to comment.

TikTok CEO Shou Zi Chew will appear before the US Congress next week. It is not clear whether the Chinese government would approve any sale, 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 don’t 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, as TikTok is popular with millions of young Americans.

Last week, Democratic Sen. Mark Warner said it was important that the US government do more to make clear what it believes are the national security risks of TikTok. “It will be up to the government to show its cards in terms of how this is a threat,” Warner said.

TikTok and CFIUS have been negotiating for more than two years over data security requirements. TikTok said it has spent more than $1.5 billion on rigorous data security efforts and denies espionage allegations.

TikTok said Wednesday that “national security concerns are best addressed with transparent, US-based protection of US user data and systems, with robust monitoring, investigation and third party verification.

Last week, the White House backed legislation by a dozen senators to give the administration new powers to ban TikTok and other foreign-based technologies if they pose a threat to national security. It could give the Biden administration new ammunition in the courts if they tried to ban TikTok.

White House national security adviser Jake Sullivan praised the bipartisan bill, saying it would “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 interest in sensitive technological sectors”.

The House Foreign Affairs Committee this month voted along party lines on a much broader bill targeting TikTok, sponsored by Republican Rep. Michael McCaul, that Democrats said would require the administration to effectively ban TikTok. and other ByteDance subsidiaries.