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TikTok Facing US Ban if Chinese Owners Don’t Sell Stakes

“If protecting national security is the objective, divestment doesn’t solve the problem,” a TikTok spokesperson said, responding to the US threat

TikTok app logo is seen in this illustration
(Reuters image from 2022).


The Biden administration has threatened to ban TikTok in the US if its Chinese owners do not sell their stakes in the popular app, the company said on Wednesday.

This is the the most dramatic move in a series of recent steps by US officials and legislators amid fears that TikTok’s US user data could be passed on to the Chinese government. The ByteDance-owned video sharing platform has more than 100 million US users.

It is also the first time that TikTok has been threatened with a potential countrywide ban under the administration of Democratic President Joe Biden. His predecessor, Republican Donald Trump, tried to ban TikTok in 2020 but was blocked by US courts.


Also on AF: US Senators’ TikTok Banning Bill Earns White House Backing


It is the powerful US-Treasury led national security body, the Committee on Foreign Investment in the United States (CFIUS) that has demanded TikTok’s Chinese owners sell their shares or face a possible ban in the US, TikTok spokesperson Brooke Oberwetter said.

“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 said in a statement.

The development, first reported by the Wall Street Journal, follows media reports earlier this week that the video sharing app was considering separating from parent ByteDance to help address US concerns about national security risks. Such a divestiture would be a last resort, reports said.

ByteDance confirmed that 60% of its shares are owned by global investors, 20% by employees and 20% by its founders.


Legal hurdles to ban

It is not clear if the Chinese government would approve any divestiture. The Chinese Embassy in Washington did not immediately respond to a request for comment.

Meanwhile, any US ban would face significant legal hurdles and potential political ramifications, since TikTok is popular with millions of young Americans.

Democratic Senator Mark Warner said last week it was important the US government do more to make clear what it believes are the national security risks from TikTok. “It’s going to be incumbent on the government to show its cards in terms of how this is a threat,” Warner said.


Also on AF: Kids Turn to China’s TikTok as West’s YouTube Falls Behind


‘Transparency the way’

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

The app has been negotiating with CFIUS for more than two years on data security requirements. TikTok said it has spent more than $1.5 billion on rigorous data security efforts and rejects spying allegations.

CFIUS had unanimously recommended in 2020 that ByteDance divest TikTok. Under pressure from then-President Trump, ByteDance in late 2020 unsuccessfully sought to finalise a deal with Walmart and Oracle Corp to shift TikTok’s US assets into a new entity.

TikTok Chief Executive Shou Zi Chew is due to appear before the US Congress next week.


Recent steps

The US has, in recent weeks, ramped up pressure on the Chinese app over user data concerns.

Last week, the White House backed legislation that could give the US government new powers to ban TikTok and other foreign-based technologies if they pose national security threats. It could give the Biden administration new ammunition in court if they seek to ban the app.

That followed the White House’s 30-day deadline for government agencies last month to ensure they do not have TikTok on federal devices and systems. Canada and the European Union also imposed similar bans on the app.

More than 30 US states have also banned employees from using the app on government-owned devices.

This month, the US House of Representatives Foreign Affairs Committee also voted along party lines on a much broader bill that Democrats said would require the administration to effectively ban TikTok and other subsidiaries of ByteDance.


  • Reuters, with additional editing by Vishakha Saxena


Also read:

TikTok Row: China Says US Seeks to Curb its Right to Develop

China’s TikTok Fined $5.4m Over Online Tracking Breach

ByteDance Staff Read Reporters’ TikTok Data to Track Leaks

TikTok App Could Control US Users’ Devices, FBI Chief Says

Australian Government Advisers Remain Cool on TikTok Ban

China Accessed Data of TikTok’s US Users – BuzzFeed


Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


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