U.S. threatens ban if Chinese parent ByteDance doesn't sell stake

Washington asked TikTok’s Chinese parent company ByteDance to divest its stake in the short video app or face a possible ban in the U.S., CNBC has confirmed.

TikTok spokesperson Brooke Oberwetter told Reuters that the company had recently heard from the U.S. Committee on Foreign Investment in the United States (CFIUS). The committee told ByteDance to sell its shares in TikTok, or the app could face a U.S. ban.

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Oberwetter or the U.S. Treasury Department were not immediately available for comment when contacted by CNBC.

A person familiar with the matter, who requested anonymity due to the sensitivity of the situation, told CNBC that TikTok had been contacted by CFIUS but the firm was seeking further clarity from Washington.

The Wall Street Journal first reported the U.S. move.

The U.S. has a number of concerns about TikTok and has maintained the app presents a national security risk. Washington is concerned that American user data on TikTok could fall into the hands of the Chinese government, due to a law in China that compels firms to hand over information to Beijing if they are requested to do so. TikTok has repeatedly stated that U.S. user data is not stored in China where those laws apply.

Washington is also concerned that TikTok could be used for influence operations by China.

A TikTok spokesperson said divesting the business would not resolve the U.S.’s concerns.

“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,” the spokesperson said.

“The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing.”

It’s not the first time that TikTok has faced an outright ban in the U.S. Former President Donald Trump in 2020 tried to ban the short video app and then pushed to get TikTok spun off from ByteDance. The U.S. courts ended up blocking Trump’s attempts.

Washington has reportedly told TikTok that its Chinese parent company ByteDance needs to divest the short video app or it could face a ban in the U.S.

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TikTok has sought to assure U.S. lawmakers that American user data is safe. In June last year, it moved all of its U.S. user traffic to Oracle’s cloud. Reuters reported in December that TikTok is also giving Oracle the ability to inspect some of the app’s code. Oracle has also been tasked with ensuring TikTok’s technology infrastructure is separate from ByteDance, Reuters reported.

So far it appears the moves have done little to calm the U.S.’s fears. In February, the White House gave government agencies 30 days to ensure TikTok was not installed on official devices.

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