WASHINGTON — The Biden administration is demanding that TikTok’s Chinese owners sell their stakes in the video-sharing app or face a possible US ban on the app, according to people familiar with the matter.
The move represents a major policy change from the administration, which has come under fire from some Republicans who say they haven’t acted hard enough to address the perceived security threat posed by TikTok, owned by Beijing-based ByteDance Ltd. heard to encounter .
The US Committee on Foreign Investments, or Cfius — an interagency federal task force that monitors national security risks in cross-border investments — recently made the sale call, the people said.
TikTok executives have said that 60% of ByteDance’s stock is owned by global investors, 20% by employees, and 20% by its founders, though the founders’ shares have outsized 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 Wednesday that a forced sale would not eliminate the perceived security risk. It has pledged to spend $1.5 billion on a program to protect US user data and content from Chinese government access or influence.
“If protecting national security is the goal, a divestiture does not solve the problem: a change in ownership would not introduce new restrictions on data flow or access,” TikTok spokeswoman Brooke Oberwetter said in a statement.
“The best way to address national security concerns is transparent, US-based protection of US user data and systems with robust third-party monitoring, screening, and verification that we already implement,” said Ms. Oberwetter.
The Treasury Department, which runs Cfius, declined to comment.
Negotiations with Cfius over a way to secure TikTok’s data have been going on 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 the Advocates include forced sale.
Deputy Attorney General Lisa Monaco and other senior US officials have repeatedly cited China’s national security law, which requires local companies to provide customer data on request, to fuel their concerns.
“Our intelligence agencies have been very clear about China’s efforts and intentions to use data to shape the use of this technology into a worldview that is totally inconsistent with our own,” Ms Monaco said in an interview last month, in response to one Question about tick tock.
TikTok says its $1.5 billion security plan would essentially lockdown its US operations, with all data stored in the US. The plan also envisages giving a US company, Oracle corp
the ability to access the company’s algorithmic code and flag issues for government inspectors.
Critics said the plan is insufficient, saying any Chinese-owned company must comply with Beijing’s demands if asked to do so.
It wasn’t immediately clear what the US’ next move would be, and people familiar with the matter say 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 lawmakers’ questions on security issues.
In 2020, the Trump administration attempted to force a sale of TikTok to a US majority stake due to similar national security concerns. But those efforts eventually 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 exempts cross-border communications from the president’s power to address threats to national security through economic sanctions.
The Biden administration’s move against TikTok could also face a long and bumpy road. The company can argue that any forced sale would be tantamount to a ban since the Chinese government would not allow the TikTok algorithm to be co-sold. The company could also argue that the move would violate both the Berman Amendment and the First Amendment.
Cfius’ move comes at the same time as Senate lawmakers are introducing a bill that could strengthen the government’s legal hand in dealing with perceived threats from foreign-owned apps.
This legislation, by Sens. Mark Warner (D., Virginia), the chair of the Senate Intelligence Committee, and John Thune (R., SD), the Senate Republican leader, would require the Commerce Department to establish procedures to reduce risks and possibly foreign ones ban technology.
This could, in appropriate circumstances, result in a ban on a particular platform or service. The measure was quickly endorsed by officials in the Biden administration.
“This legislation would authorize the United States government to prevent certain foreign governments from using technology services operated in the United States in a way that poses a risk to Americans’ sensitive information and our national security,” the national security adviser said Jake Sullivan in a statement.
White House Press Secretary Karine Jean-Pierre recently declined to say whether Mr. Biden would ban TikTok if the law passed, giving him the power to do so, but acknowledged that the White House had “concerns about these.” special app”.
“We want to make sure the digital products and services Americans use every day are safe and secure,” said Ms. Jean-Pierre.
Andrew Duehren, Sabrina Siddiqui, and Stu Woo contributed to this article.
Write to John D. McKinnon at John.McKinnon@wsj.com
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