U.S. orders ByteDance to divest TikTok or face potential ban

 

PALO ALTO, U.S./TOKYO -- The U.S. government has told ByteDance to sell its stake in TikTok after more than two years of negotiations failed to convince Washington that the popular short-video app is not a national security risk, according to people familiar with the matter.

 Move is latest escalation by lawmakers over fears user data could be passed on to China’s government.

The Biden administration has threatened to ban TikTok in the US unless the social media company’s Chinese owners divest their stakes in it, according to news reports on Wednesday.

The move, first reported by the Wall Street Journal, is the most dramatic in a series of escalations by US officials and legislators, driven by fears that US user data held by the company could be passed on to China’s government. It also comes amid a global backlash to the popular video-based app over concerns about the potential for Chinese spying, with countries including the UK, Canada and Australia recently moving to ban the app from government phones.

The US has already banned TikTok on federal government devices but this marks the first time under Biden’s administration that a potential nationwide ban on TikTok has been threatened. Any US ban would face significant legal hurdles. Biden’s predecessor, Donald Trump, had tried to ban TikTok in 2020 but was blocked by the courts.

TikTok spokesperson 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 Chinese owners of the app sell their shares, and said otherwise they would face a possible US ban of the video app.

TikTok is one of the world’s most popular social networks with more than 100 million US users.

The Journal said 60% of ByteDance shares are owned by global investors, 20% by employees and 20% by its founders. CFIUS, a powerful national security body in 2020 had unanimously recommended that ByteDance divest TikTok.

“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’s Oberwetter said in a statement.

The move comes as TikTok’s CEO, Shou Zi Chew, is due to appear before the US Congress next week.

TikTok and CFIUS have been negotiating for more than two years on data security requirements. TikTok said it has spent more than $1.5bn on rigorous data security efforts and rejects spying allegations.

TikTok said on Wednesday that “the best way to address concerns about national security is with the transparent, US-based protection of US user data and systems, with robust third-party monitoring, vetting, and verification”.

The news of a potential US ban followed reports this week that Britain is moving forward with its own plan to ban TikTok on government cellphones. The European Commission announced a similar ban last month, and on Monday, Rishi Sunak, the UK prime minister, hinted that he may follow suit, saying he would take “whatever steps are necessary” to protect Britain’s security.

The cabinet office’s announcement of a potential ban could come as early as Thursday, sources told the Guardian, which reported that some critics and experts were calling for Britain to extend the ban to also cover personal phones of officials and ministers.

Talks of restrictions across the globe have escalated in recent weeks after news of the Chinese spy balloon that was found hovering over the US. The scandal prompted a US congressional committee to move forward with legislation that would empower the US president to ban the app. Michael McCaul, a GOP congressman and chair of that committee, said he feared TikTok was akin to “spy balloon in your phone”.