US orders Bytedance to either sell TikTok or face ban in America

The United States of America under the Biden administration has requested Chinese internet giant, ByteDance, to sell TikTok or risk facing an outright ban in America.

According to a report from the Wall Street Journal, the recent demand was made by the Committee on Foreign Investment in the U.S., or Cfius – a multiagency federal task force that oversees national security risks in cross-border investments.

The rekindles the pressure that ByteDance faced under the Trump administration when in 2020, it was forced to consider selling TikTok. Under the Trump administration, the President signed executive orders banning Chinese-owned TikTok operations in the country in 45 days if it was not sold by ByteDance.

This forced sale attracted requests from the likes of Microsoft, Oracle and even Twitter. Two tech companies, Oracle and Walmart struck a complex deal that appeared to have gotten Trump’s approval, but it wasn’t completed.

The attempt ultimately hit a brick wall when TikTok and ByteDance went to court to block a proposed federal ban. Apparently the companies argued that the ban would violate a law known as the Berman amendments, which exempt cross-border communications from the president’s powers to address national security threats through economic sanctions. 

When President Biden came into power after Trump in 2021, he annulled the Trump administration’s executive orders against TikTok.

Biden however signed a new order which required the US Commerce Department to constantly evaluate apps linked with foreign adversaries like China and take action if they’re determined to present a national security risk.

TikTok was founded in Beijing in 2012 by Zhang Yiming, ByteDance Chief Executive Liang Rubo and others. The company has consistently argued that it is a wholly owned Chinese entity and that 60% of ByteDance shares are owned by global investors, 20% by employees and 20% by its founders, though the founders’ shares carry outsize voting rights, as is common with tech companies.

On Wednesday, TikTok argued that a mandatory sale of the company would not resolve the alleged security concerns, and they have committed to investing $1.5 billion in a program aimed at protecting American user data and content from any potential access or influence by the Chinese government.

According to TikTok spokesperson Brooke Oberwetter in a statement, “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.

She said that “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.”

As per previous reports by The Wall Street Journal, negotiations with Cfius regarding measures to safeguard TikTok’s data have been ongoing for over two years, but have reached an impasse for several months. Representatives from the Pentagon and the Justice Department on the panel have been advocating for a compulsory sale.

Deputy Attorney General Lisa Monaco and other senior U.S. officials have repeatedly cited China’s national security law, which requires companies there to turn over customer data if requested, as fueling their concerns.

 “Our intelligence community has been very clear about China’s efforts and intention to mold the use of this technology using data in a worldview that is completely inconsistent with our own,”  Ms. Monaco said in an interview last month, in response to a question about TikTok. 

TikTok says that its $15 billion plan would essentially segregate its US operations and store all data within the country. Additionally, the plan involves granting access to the company’s algorithmic code to Oracle Corp., which would be responsible for identifying any concerns and reporting them to government inspectors.

However, some critics have argued that the proposed plan is inadequate, as any Chinese-owned company would be compelled to comply with Beijing’s requests if required.

TikTok’s chief executive, Shou Zi Chew, is slated to testify before the House Energy and Commerce Committee next week to address lawmakers’ questions on the security issues. 

However it is being argued that TikTok and ByteDance would bring up the same argument that the ban would violate the same Berman amendments.

Last month, the White House gave government agencies 30 days to ensure they do not have TikTok on federal devices and systems. More than 30 U.S. states have also banned employees from using TikTok on government-owned devices.

TikTok currently has over 100 million US users and generates an estimated $10 billion in revenue per annum.