The Committee on Foreign Investment in the U.S. (CFIUS), a federal cross-agency task force, ruled that the Chinese owners of the social-media application TikTok must sell their stake in the company or face a potential ban in the United States.
CFIUS, which investigates national security risks stemming from transnational investments led by the Department of Treasury, communicated the demand earlier this week to the Beijing-based parent company, ByteDance.
However, the move has yet to bring about the desired outcome. TikTok spokeswoman Brooke Oberwetter dismissed the divestment strategy as failing to address the root cause concerns of user privacy and data sharing.
“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,” Oberwetter noted in a statement provided to the Wall Street Journal.
“The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing,” the spokeswoman added.
Executives of the Chinese firm have publicized that 60 percent of ByteDane is owned by international investors, a further 20 percent by employees, and the remaining 20 percent by its founders who carry disproportionate voting rights, a common feature of technology companies.
The social-media application collects extensive user information including biometric and location data which many fear could be shared with the Chinese Communist Party (CCP). To allay growing American concerns over data privacy, TikTok has announced its intention to keep all American data collected in the United States in an initiative called Project Texas.
Negotiations between CFIUS and TikTok over the company’s user data policies have recently stalled after years of background negotiation. The stalemate has led the Pentagon and Department of Justice to advocate for the forced sale, the Wall Street Journal reports.
“Our intelligence community has been very clear about China’s efforts and intention to mold the use of this technology using data in a worldview that is completely inconsistent with our own,” Ms. Monaco said in an interview last month, in response to a question about TikTok.
Meanwhile, Senators Mark Warner (D., Va.) and John Thune (R., S.D.) have been working to introduce the Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT) Act which seeks to empower the Department of Commerce to review information communication technology that may pose a risk to the U.S. supply chain.
“This legislation would empower the United States government to prevent certain foreign governments from exploiting technology services operating in the United States in a way that poses risks to Americans’ sensitive data and our national security,” National Security Adviser Jake Sullivan argued in an earlier statement.
TikTok’s chief executive, Shou Zi Chew, is set to appear before the House Energy and Commerce Congress this week. The app has recently been banned across a host of government devices in Canada, the European Union, and the United States.
A similar initiative spearheaded by the Trump administration in 2020 sought to trigger a sale of the company citing national security considerations. However, ByteDance ultimately fought the matter in court and won because the order violated the Berman amendments, which protects international communications from presidential security prerogatives and economic sanctions.
The app boasts over 100 million users in America alone.