US demands ByteDance to sell TikTok stakes or face ban

The Biden Administration has demanded TikTok's parent company, Beijing-based ByteDance Ltd, to either sell their stakes or face a possible U.S. ban, reported the Wall Street Journal.

The move is the latest and most dramatic in a series of steps taken recently, due to growing fears over security data. U.S. officials and legislators have raised concerns about the Chinese app being a national security threat, and with more than 100 million U.S. users on TikTok, the administration feels that the app's user data could be leaked to China's government.

Though TikTok is already banned from government-issued mobile devices in the U.S., this is the first mention of a potential nationwide ban.

Harshest stance taken by the U.S. government

TikTok is required to work with Chinese intelligence services and is liable to share data with the government. U.S. concerns over the app have grown significantly over China’s national security law, which mandates that Chinese companies turn over customer data as and when requested by the government.

The WSJ reported that 60 percent of ByteDance shares are owned by global investors, 20 percent by employees, and 20 percent by its founders. The Committee on Foreign Investment in the U.S (CFIUS) - a multi-agency federal task force that oversees national security risks in cross-border investments - had recommended in 2020 that TikTok be divested.

"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," TikTok spokesperson Brooke Oberwetter told Reuters.

Even at a regional level, the U.S. state of Montana recently passed a senate bill to ban the app. In response, TikTok released a statement on March 14, 2023, which said, "The ban's sponsors say it will address national security concerns, that TikTok operates as a surveillance tool of the Chinese government. That's simply not true. The fact is, all data for our U.S. users is stored on servers in the United States, and U.S.-based personnel manage access to that data and the algorithms that determine your For You feed."

Recently, the White House also supported legislation by Democratic Senator Mark Warner, the chairman of the Senate Intelligence Committee, and Republican Senator John Thune to grant the government the authority to outlaw any foreign-based technology if they pose concerns to national security.

TikTok had criticized the legislation to outlaw foreign-based tech

TikTok had said in a statement earlier, "U.S. ban on TikTok is a ban on the export of American culture and values to the billion-plus people who use our service worldwide," criticizing the legislation.

TikTok is already banned in India, over geopolitical issues, where the video app had about 190 million users, the highest at the time in the world. It has now been surpassed by the U.S. with over 100 million active users. It should be noted that TikTok in China is known by another name - Douyin - which has over 670 million users.

There’s been a spate of global pressure on TikTok from countries like Canada, Australia, Taiwan, and the European Union, which have banned their federal employees from using the app. The most recent to join this list is Belgium. The country’s national security council had warned about the dangers of TikTok collecting a lot of data.