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The United States has told the Chinese owners of the video-sharing app TikTok that they must sell their shares or risk the app being banned in the United States, people familiar with the matter said. The Treasury Department is leading the discussion through the Committee on Foreign Investment in the United States, or Cfius, and recently made the request to Tiktok owner ByteDance Ltd., the people said. They asked not to be identified discussing private deliberations. ALSO READ: White House backs bipartisan bill that could lead to TikTok ban TikTok's management has discussed the possibility of separating from ByteDance Ltd., its Chinese parent company, to help address concerns about national security risks, Bloomberg News reported Tuesday. One person said that TikTok owners could retain some form of ownership, but through a passive structure.
“If the goal is to protect national security, divestiture does not solve the problem: a change in ownership would not place any new restrictions on transmissions or access to data,” TikTok spokeswoman Maureen Shanahan said in a statement. press. "The best way to address national security concerns is to provide transparent, US-based protection of US user data and systems, with robust monitoring, auditing, and third-party auditing, that we are already implementing.
The company, which is under national security review by Cfius, agreed last year to implement a series of changes to a plan it calls Project Texas. The proposal includes the arrival of US tech giant Oracle Corp. to host US user data and review its software, and naming a government-approved three-person oversight board. Many movements are already underway.
TikTok's proposal to add layers of monitoring and separation of ByteDance has not convinced management, according to another person familiar with the matter. TikTok has invested $1.5 billion in the Texas project, but the details have also been met with skepticism on Capitol Hill.
The move marks a major escalation by the administration in US relations with China at a time when the two countries are already at odds over issues ranging from the fate of Taiwan to microchip export controls to strengthening security. China's association with Russia. ALSO READ: The real and acute threat of a Sino-US conflict over Taiwan
The US National Security Council and the Treasury and Justice Departments did not immediately respond to requests for comment. The Wall Street Journal reported on the Biden administration's request on Wednesday.
US officials have raised longstanding national security concerns about TikTok. FBI Director Christopher Wray told lawmakers in November that the Chinese government could use the app to control the data or software of millions of users, and its recommendation algorithm, which determines which videos users watch, "could be used for influence operations if they so choose.
"Under Chinese law, Chinese companies are basically required, and I'm going to cut corners here, to basically do whatever the Chinese government wants them to do in terms of sharing information or serving as a tool for the Chinese government." Wray told the House Homeland Security Committee. "That is a reason in itself to be extremely concerned."
TikTok CEO Shou Chew has been asked to testify before a House committee next week about the app's privacy and data security practices, and the company's relationship with the Chinese Communist Party.
A divestment, which could result in a sale or an initial public offering, is considered a last resort, to be carried out only if the company's existing proposal with national security officials is not approved, according to people familiar with the dossier. , who asked not to do it. identify yourself by discussing non-public information.
The Chinese government should agree to such a transaction, the people said.
