White House to China: Sell TikTok or Face U.S. Ban – Reports

March 16, 2023

The Biden Administration is reportedly levying a demand at China: sell Chinese stakes in TikTok or face a possible ban on the video sharing app in the U.S.

The Committee on Foreign Investment in the U.S. (CFIUS), which reviews deals by foreign purchasers for potential national security risks, made the TikTok sale demand recently, sources told the Wall Street Journal, which first reported on the discourse. 

According to one NBC News source, however, TikTok does not see the Administration’s assertion as a final order.

Discussions between TikTok and the U.S. government have been going on for years. But in the past several months,  Congress, the White House, and more than a dozen states have taken actions to ban TikTok on government devices. 

Further, there’s a proposal currently in the House of Representatives to ban TikTok in the U.S. nationwide on all devices. The legislation has already passed in the House Foreign Affairs Committee this month.

The bans began after FBI Director Chris Wray in November warned that the Chinese government could use TikTok to control data collection on millions of American users, or to control the recommendation algorithm, which could be used for influence operations. 

Last week, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Tom Cotton (R-AR) jointly requested for U.S. intelligence officials to launch an investigation into possible counterintelligence risks posed by TikTok.

ByteDance, the company that owns TikTok, was founded in Beijing in 2012 by Zhang Yiming, ByteDance Chief Executive Liang Rubo and others.

TikTok executives have said that 60% of shares in ByteDance are owned by global investors, 20% by employees and 20% by its founders. The founders’ shares carry outsize voting rights, though, which is common with tech companies. 

TikTok claims China does not have jurisdiction over content of the app, which does not operate in China and is not influenced by any foreign government.

“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, ” TikTok spokeswoman Brooke Oberwetter said in a statement.

TikTok has pledged to spend $1.5 billion on a program to safeguard U.S. user data and content from Chinese government access or influence.

According to sources, CFIUS has started to review Musical.ly, which TikTok did not seek clearance from the U.S. agency before purchasing. This reportedly gives CFIUS authority to investigate it now.

CFIUS is in said by sources to be in talks with TikTok about measures the app could take to avoid divesting its Musical.ly assets. The details of those mitigations and CFIUS’ specific concerns remain unclear. The U.S. Treasury, which chairs CFIUS, has not responded to reporters’ requests for comment.

According to reports, TikTok has more than 1 billion monthly active users in more than 150 countries worldwide, including a reported 135 million users in the U.S., the majority of whom are 18-24 years old. 

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