TikTok says US threatens to ban if Chinese owners don’t sell shares

WASHINGTON, March 15 (Reuters) – The Biden administration has demanded that Chinese owners of TikTok divest their shares in the popular video app or face a possible U.S. ban, the company told Reuters on Wednesday.

The move, first reported by The Wall Street Journal, is the most dramatic in a string of recent moves by US officials and lawmakers that have raised concerns that US TikTok user data could be passed to the government. Chinese. TikTok, owned by ByteDance, has over 100 million users in the United States.

This is the first time under Democratic President Joe Biden’s administration that a potential ban on TikTok has come under threat. Biden’s predecessor, Republican Donald Trump, tried to ban TikTok in 2020 but was blocked by the courts.

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

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

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

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

The White House declined to comment.

TikTok chief executive Shou Zi Chew is due to appear before the US Congress next week. It is unclear whether the Chinese government would approve of any surrender.

Any US ban would face significant legal hurdles.

TikTok and CFIUS have been negotiating data security requirements for more than two years. TikTok said it has spent more than $1.5 billion on stringent data security efforts and denies spying claims.

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

Last week, the White House backed legislation by a dozen senators to give the administration new powers to ban TikTok and other foreign-based technologies if they pose national security threats. That could give the Biden administration new ammunition in the courts if it seeks to ban TikTok.

White House national security adviser Jake Sullivan hailed the bipartisan bill, saying it would “enhance our ability to deal with the discrete risks posed by individual transactions and the systemic risks posed by certain categories of transactions involving countries of concern in sensitive technology sectors”.

The House 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; Editing by Devika Syamnath, Daniel Wallis and Leslie Adler

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