Topline
Federal regulators recently threatened to ban TikTok in the United States if its China-based owners don’t sell their stake in the company, the social media platform told multiple news outlets Wednesday, a dramatic escalation as U.S. officials scrutinize the fast-growing social network for national security and data privacy concerns.
BERLIN, GERMANY – SEPTEMBER 21: A young man holding a smartphone casts a shadow as he walks past an … [+]
Key Facts
The ultimatum was made by the Committee on Foreign Investment in the U.S. (CFIUS), a government agency with the power to review some investments on national security grounds, the Wall Street Journal and Washington Post reported, citing unnamed sources.
TikTok confirmed the news to Reuters and CNN, saying CFIUS recently contacted the social network and threatened to ban the app—which is owned by Beijing-based ByteDance—unless a sale takes place.
In a statement to Forbes, TikTok argued “divestment doesn’t solve the problem” and “a change in ownership would not impose any new restrictions on data flows or access.”
Bloomberg reported Tuesday that TikTok’s leadership is open to splitting with ByteDance to avoid a ban, either by selling the app or going public, though no final decisions have been made and the company reportedly views a sale as a last resort.
The Treasury Department—which leads CFIUS—declined to comment to Forbes.
What To Watch For
Lawmakers introduced bipartisan legislation last week that would give the Commerce Department the power to ban technology from certain foreign countries that poses an “undue or unacceptable risk” to Americans. The bill didn’t explicitly mention TikTok, but senators cited it as a potential threat.
Key Background
TikTok’s links to China have faced increasing scrutiny in recent months, fueled by concerns the Chinese government could use the app to access Americans’ data. Forbes reported last year hundreds of TikTok and ByteDance employees previously worked for Chinese state media outlets, and some ByteDance staffers used the app to spy on Forbes journalists covering the company (TikTok said the staffers involved in spying no longer work at ByteDance and called their actions an “egregious misuse of their authority”). Last week, a former ByteDance worker told Sen. Josh Hawley (R-Mo.) employees can easily toggle between U.S. and Chinese data with limited approvals, contradicting TikTok’s claims —a claim TikTok disputed. CFIUS has investigated TikTok for years, but some lawmakers have encouraged the agency to conclude its probe, with Sens. Richard Blumenthal (D-Conn.) and Jerry Moran (R-Kansas) urging the agency to “impose strict structural restrictions” on the platform’s links with ByteDance. Former President Donald Trump previously tried to ban TikTok on national security grounds in 2020, but federal courts blocked the move.
Contra
TikTok, for its part, has sought to win over politicians’ and regulators’ trust. Last year, the company said U.S. user data was shifted to servers owned by Texas-based company Oracle, and it has reportedly asked Oracle to audit its algorithms to ensure they’re insulated from the Chinese government.
Source: https://www.forbes.com/sites/joewalsh/2023/03/15/us-threatens-to-ban-tiktok-unless-chinese-owners-sell-platform-reports-say/