Sources familiar with the matter, as reported by The Wall Street Journal on Wednesday, stated that the Biden administration is threatening TikTok's Chinese owners with the potential for a US ban of the app if they don't divest their ownership stakes in the company.
The Committee on Foreign Investment in the US, more commonly referred to as Cfius, recently made a demand, according to the Journal's sources.
The Journal remarked the call on TikTok as the Biden administration's notable transformation, which has been rebuked for not being stringent enough in dealing with the national security risk posed by the platform.
ByteDance, hailing from Beijing, is the owner of TikTok. Global investors have a share of 60%, employees own 20%, and the owners have the rest with more voting power, according to the Journal based on information from TikTok's executives.
A spokesperson for TikTok said, noting that divestment does not answer the issue of national security; a shift in proprietorship would not bring about any fresh regulations on data transfers or access. The optimal solution for handling worries about national security is the transparent, U.S.-based safeguard of U.S. user data and systems, with thorough third-party checking, vetting, and authentication, which is already in progress.
In light of the national security worries, TikTok's leadership is weighing splitting from ByteDance, Bloomberg reported. The spin-off would be the final resort; if the current proposal is denied by security authorities, the company is likely to adopt the option, Bloomberg said.
The Biden government's most recent proposal is the latest step in an extended effort to take on TikTok in the US.
Insider noted that when House Foreign Affairs Committee Chair Michael McCaul proposed a bill in February requiring the White House to prohibit TikTok or any app that may be subjected to China's influence, he compared TikTok to a spy balloon that sends sensitive data to the "mothership in Beijing".
Last year, in order to assuage US officers' concerns, TikTok accepted to implement several modifications recommended by Cfius- a plan labeled Project Texas, as reported by Bloomberg. This proposal comprises the installation of a three-person government-approved supervision board and the enlistment of a software business, Oracle, to manage US data and examine TikTok's software, Bloomberg said.
During December, the Senate voted to prohibit TikTok from government devices, and a few states have subsequently implemented either full or partial restrictions of the app. Additionally, several universities have taken steps to disallow the utilization of TikTok.
Insider has claimed that in the national security discussion over TikTok, other quickly advancing Chinese tech organizations, such as Shein and Temu, may be eliminated, and could even affect American organizations with presences in China.