December 27, 2022
Security concerns over TikTok have led some Biden Administration officials to push for a sale of the Chinese-owned company’s U.S. operations, in order to ensure that Beijing can’t harness the app for espionage and political influence, reports The Wall Street Journal.
The proposal for a forced sale has arisen in discussions by the Committee on Foreign Investment in the United States (CFIUS), an interagency government panel that has been negotiating with TikTok for more than two years on a way to wall off the company’s data and operations from the Chinese government.
Pentagon and Justice Department representatives on the panel are among those supporting a forced sale, the people said, on grounds that the risk of Beijing accessing TikTok data or influencing the videos that Americans view on TikTok can only be addressed by separating the app from its Chinese owner, Beijing-based ByteDance.
“We’re talking about a government that, in our own intelligence community’s estimation, has a purpose to move global technology use and norms to privilege its own interests and its values, which are not consistent with our own,” Deputy Attorney General Lisa Monaco said in an interview, in which she declined to discuss TikTok specifically. “That’s the perspective I bring to these issues.”
But the Treasury Department, which chairs the panel, is worried that such an order might be overturned in court, and is looking for other possible solutions, according to a person familiar with that department’s thinking.
CFIUS experts say the committee could make a recommendation to the president—who has the authority to force a sale, or divestiture, of TikTok by its Chinese owners for it to continue operating in the United States.
A White House spokesperson declined to comment on a continuing CFIUS case.
The wildly popular TikTok is used by more than 100 million Americans and, increasingly, by businesses as a way to connect with customers.
But the app’s Chinese ownership has put increasing pressure on the Biden administration to resolve security concerns. Former President Donald Trump unsuccessfully attempted to force TikTok to come under U.S. control; then, tried to impose a ban on the app when that didn’t happen.
President Biden rescinded Trump’s attempted ban after taking office, saying it wasn’t enforceable in the wake of successful legal challenges. He promised a comprehensive plan to address the security risk from TikTok and other apps based in adversarial nations—but has yet to deliver, helping fuel efforts in Congress and in the states to constrain TikTok.
TikTok has consistently maintained that it would never share user data with the Chinese government. On Thursday, December 22, TikTok said it had fired employees and tightened protocols after discovering they had improperly accessed the data of journalists.
TikTok declined to comment on the prospect of a forced sale. It said it believed it can address the concerns that the U.S. government has raised. TikTok has been negotiating with U.S. officials since 2020 on an arrangement to ensure that data on U.S. users can’t be shared with Beijing.
As a result of those talks, TikTok has agreed to have the data of American users managed by a subsidiary called TikTok U.S. Data Security, according to people with knowledge of the proposal. Only vetted employees of the subsidiary could access user data, the people said.
The subsidiary would be monitored by approved third parties, including Oracle, whose servers would store the data, and would be overseen by a three-person board composed of U.S. national-security experts, the people said.
The agreement would also give Oracle the power to examine TikTok’s recommendation algorithm, which gives priority to the short videos that users see, the people said.
Despite these promises, some U.S. security officials and lawmakers believe that no Chinese company could withstand pressure from the Chinese government to turn over information. Many of these same people are concerned that China could seek to dictate videos that are shown—or blocked—on TikTok in a bid to influence U.S. popular opinion.
Treasury Secretary Janet Yellen has said that TikTok poses legitimate national-security concerns, but the people familiar with internal CFIUS discussions say Treasury officials are concerned that an attempt to force a sale could be caught up in a protracted legal battle the government could ultimately lose.
Besides a potential legal challenge, another hurdle in forcing ByteDance to sell its American operations to a company in the United States, or perhaps an allied nation, is the cooperation of the Chinese government. Beijing could use export controls and forbid ByteDance from selling technology related to the video-recommendation algorithm that has made TikTok so successful.
The United States long has been skeptical of foreign ownership of domestic media. For decades it has placed tight limits on foreign ownership of U.S. broadcast media, even local radio stations. But the lightly regulated Internet has never had such rules.
The Pentagon, State Department and other agencies already have banned TikTok on government-issued smartphones and other devices, and Congress recently voted to expand that ban to all government agencies. A bipartisan group of House and Senate lawmakers also have introduced legislation to ban TikTok.
And over the past month, Republican governors in more than a dozen states have enacted orders barring the use of TikTok from government devices. Departing Nebraska Governor Pete Ricketts, a Republican who ordered such a ban in his state in 2020, said concerns about TikTok have only grown since his action.
“Two years ago, it was, ‘What kind of data are they collecting?’” he said. Now, he said, another concern is, “TikTok pushes out what the American consumer audience sees.”
Research contact: @WSJ