Biden Administration Threatens To Ban TikTok Unless Chinese Owners Sell Their Stake

The Biden administration may ban TikTok if its Chinese owners fail to address national security concerns by selling their stake, say two sources.

The US inter-agency panel, Cfius, has requested divestiture as part of its ongoing review of TikTok's parent company, ByteDance, due to foreign investment concerns.

TikTok, a renowned video app, has been under increasing scrutiny amid concerns that the data it gathers from US users could be shared with the Chinese government and Communist party.

Even though the app has rejected these allegations, an increasing number of senators from both parties have demanded either a ban of the app or for ByteDance to relinquish its US subsidiary. The demand was first reported by The Wall Street Journal.

60 per cent of ByteDance shares belong to global investors, with the remaining 40 per cent divided between employees and founders including CEO Zhang Yiming and Liang Rubo.

Shou Zi Chew, TikTok's CEO, will appear before the House energy and commerce committee to address concerns about the app's data security and its ties to China.

TikTok has been in talks with the US government regarding national security for the past two years. In response to increased scrutiny, TikTok invested over $1.5 billion into a corporate restructuring plan called "Project Texas".

This plan aims to protect user data and content from Chinese influence through a partnership with US cloud software group, Oracle. The ultimate goal is to meet requirements set by Cfius.

Negotiations for a deal have recently come to a halt. A new bill introduced by Senate Democrats and Republicans gives the administration the power to ban Chinese apps that threaten security, including TikTok, which has been endorsed by the White House.

TikTok is reviewing options after sale demand, but will continue Project Texas, according to a source familiar with the matter.

TikTok claimed that divestment wouldn't address national security concerns as transferring ownership wouldn't add new constraints on data access or movement.

We can best address national security concerns by transparently protecting American user data and systems, through third-party monitoring and verification, which is currently being implemented, the social media company said in a statement.