TikTok says the US is threatening a ban if Chinese owners don’t sell shares

WASHINGTON, March 15 (Reuters) – The Biden administration has demanded that TikTok’s Chinese owners divest their stake in the popular video app or risk a possible US ban, the company told Reuters on Wednesday.

The move, first reported by the Wall Street Journal, is the most dramatic in a series of recent moves by US officials and lawmakers who have raised fears that US TikTok user data could be passed on to the Chinese government. TikTok, owned by ByteDance, has more than 100 million US users.

It is the first time under Democratic President Joe Biden’s administration that a possible ban on TikTok has been threatened. Biden’s predecessor, Republican Donald Trump, had tried to ban TikTok in 2020, but was blocked by the court.

TikTok spokesperson Brooke Oberwetter told Reuters the company had recently heard from the US Treasury-led Committee on Foreign Investment in the United States (CFIUS), which demanded that the app’s Chinese owners sell their shares, and said they would otherwise face a possible U.S. ban on the video app.

The Journal said that 60% of ByteDance shares are held by global investors, 20% by employees and 20% by founders.

CFIUS, a powerful national security agency in 2020, had unanimously recommended that ByteDance divest TikTok.

“If protecting national security is the goal, divestment does not solve the problem: a change of ownership would not impose new restrictions on data flows or access,” Tiktok’s Oberwetter said in a statement.

The White House declined to comment.

TikTok CEO Shou Zi Chew will appear before the US Congress next week. It is not clear whether the Chinese government would approve a divestment.

Any US ban would run into significant legal hurdles.

TikTok and CFIUS have been negotiating data security requirements for over two years. TikTok said it has spent more than $1.5 billion on rigorous data security efforts and denies espionage allegations.

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

Last week, the White House backed legislation by a dozen senators to give the government new powers to ban TikTok and other foreign-based technologies if they pose a threat to national security. It could give the Biden administration fresh ammunition in court if they wanted to ban TikTok.

White House National Security Adviser Jake Sullivan praised the bipartisan bill, saying it would “strengthen our ability to address discrete risks from individual transactions and systemic risks from certain types of transactions involving countries of concern in sensitive technology sectors.”

The House of Representatives Foreign Affairs Committee this month voted along party lines on a bill sponsored by Republican Rep. Michael McCaul to give Biden the power to ban TikTok.

Reporting by David Shepardson in Washington, Echo Wang in New York and Eva Mathews in Bengaluru; Edited by Devika Syamnath, Daniel Wallis and Leslie Adler

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