CoinDesk technical analyst and chief content officer Pete Pachal discusses concerns about TikTok, Congress’s attempt to ban the social networking app, and journalists testifying at the Twitter hearing.
The Biden administration is demanding that TikTok’s Chinese owners sell their stakes in the video-sharing app or face a possible U.S. ban on the app, according to people familiar with the matter.
The move represents a major policy shift by the administration, which has come under fire from some Republicans who say it has not taken a tough enough stance to address the perceived security threat from TikTok, which is owned by ByteDance Ltd. Beijing. .
The Committee on Foreign Investment in the US, or Cfius — a multi-agency federal task force that oversees national security risks in cross-border investments — made the sale demand recently, the people said.
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The Treasury Department’s foreign investment committee is reportedly threatening to ban TikTok unless it separates from its China-based parent company, ByteDance. ((Photo Illustration Jakub Porzycki/NurPhoto via Getty Images) / Getty Images)
TikTok executives said 60% of ByteDance’s shares are owned by global investors, 20% by employees and 20% by its founders, although the founders’ shares carry large voting rights, as is common with tech companies. The company was founded in Beijing in 2012 by Zhang Yiming, ByteDance Chief Executive Liang Rubo and others.
TikTok said on Wednesday that a forced sale would not address the perceived security risk. It has pledged to spend $1.5 billion on a program to protect US user data and content from access or influence by the Chinese government.
“If the goal is to protect national security, the divestiture does not solve the problem: a change in ownership will not impose new restrictions on data flows or access,” TikTok spokeswoman Brooke Oberwetter said in a statement.
“The best way to address national security concerns is to transparently protect US user data and systems based on the US, with strong third-party monitoring, auditing and verification, which we already have in place,” said Ms. Oberwetter.
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The Finance Ministry, which heads Cfius, declined to comment.
Negotiations with Cfius over a way to safeguard TikTok’s data have been ongoing for more than two years and have been at an impasse for months, the Wall Street Journal previously reported, with Pentagon and Justice Department officials on the panel among those supporting a forced sale. .
Deputy Attorney General Lisa Monaco and other senior US officials have repeatedly cited China’s national security law, which requires companies there to hand over customer data if requested, as fueling their concerns.
“Our intelligence community has been very clear about China’s efforts and intent to shape the use of this technology using data in a worldview that is completely inconsistent with ours,” Ms. Monaco said in an interview last month. , answering a question about Tik Tok.
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FBI Director Christopher Wray, National Security Agency Director Gen. Paul Nakasone, Director of National Intelligence Avril Haines, CIA Director William Burns and Director of Defense Intelligence Agency Lt. Gen. Scott Berrier testify during a Se. ((Photo by Drew Angerer/Getty Images) / Getty Images)
TikTok says the $1.5 billion security plan will effectively shut down its US operations, with all data stored in the US. inspectors.
Critics have said that plan does not go far enough, saying any Chinese-owned company must comply with Beijing’s demands if called upon.
It was not immediately clear what the U.S.’s next step would be, and people familiar with the matter said a resolution could be months away. TikTok CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee next week to answer questions from lawmakers about security issues.
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In 2020, the Trump administration tried to force the sale of TikTok to majority US ownership, based on similar national security concerns. But that effort ultimately foundered when TikTok and ByteDance went to court to block a proposed federal ban. The companies argued that the ban would violate a law known as the Berman Amendments, which exempt cross-border communications from the president’s powers to address national security threats through economic sanctions.
The Biden administration’s move against TikTok could also face a long and bumpy road. The company may argue that any forced sale would amount to a ban because the Chinese government would not allow the TikTok algorithm to be sold along with it. The company may also be able to argue that the move would violate the Berman Amendment, as well as the First Amendment.
Cfius’ move came as Senate lawmakers introduced a bill that could strengthen the government’s legal hand in dealing with perceived threats from foreign-owned apps.
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the federal government is in the process of banning TikTok from agency devices. (Photo by Fabian Sommer/dpa (Photo by Fabian Sommer/image alliance via Getty Images) / Getty Images)
That legislation from Sens. Mark Warner (D., Va.), the chairman of the Senate Intelligence Committee, and John Thune (R., SD), the Senate Republican whip, would require the Commerce Department to establish risk mitigation procedures and possibly ban foreign technology.
This could lead to a ban under appropriate circumstances for a particular platform or service. The measure was quickly endorsed by Biden administration officials.
“This legislation will empower the United States government to prevent certain foreign governments from exploiting technology services operating in the United States in a way that poses risks to Americans’ sensitive data and our national security,” said National Security Adviser Jake Sullivan.
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White House spokeswoman Karine Jean-Pierre recently declined to say whether Mr. Biden would ban TikTok if the bill passed and gave him the authority to do so, but acknowledged that the White House had “concerns with this particular app.” .
“We want to make sure the digital products and services Americans use every day are safe and secure,” said Ms. Jean-Pierre.
The Wall Street Journal’s Andrew Duehren, Sabrina Siddiqui and Stu Woo contributed to this article.