The U.S. government has demanded that TikTok’s Chinese owners ByteDance sell their shareholding in the widely popular video sharing app – or else face a ban, according to the Wall Street Journal.
America cites “national security” as the reason for the ban. The government has for a long time raised concerns about the social media site, voicing fears that China could use the app as a tool for espionage, and to possibly influence political outcomes in the U.S.
Former U.S. president Donald Trump threatened the exact same action in 2020, but the High Court struck the executive order down. Now President Biden is taking a tougher stance after Democrats were criticized for being weak on ByteDance, the Quartz reported.
TikTok rubbishes security concerns
The demand for ByteDance founders and owners to sell their 20% stake in TikTok came from the U.S. Committee on Foreign Investment, or CFIUS, a multi-agency federal task force responsible for national security risks in cross-border investments, per WSJ.
While the shares of Zhang Yiming, ByteDance CEO Liang Rubo, and others who helped found the company in Beijing in 2012 appear in the minority, the shareholding carries a reported “outsized” share in voting rights.
Global investors own 60% of ByteDance’s shares, and the other 20% is owned by employees. In a statement shared with Reuters news agency, TikTok spokeswoman Brooke Oberwetter explained that banning the video-sharing app on national security grounds would be a farce.
“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.
“The best way to address concerns about national security is with the transparent, US-based protection of US user data and systems.”
A Mar. 16 report by The Information suggested that the Chinese government will not take the U.S. threats lying down. It said Beijing will “oppose any attempt by the Biden administration to force TikTok’s Chinese shareholders to sell their stakes.”
Banning the app everywhere
The U.S. is a key market for ByteDance, with over 100 million people using TikTok in the country. That is partly why the company has been fighting tooth and nail to remain operational in America, even as the working environment looks increasingly difficult.
TikTok pledged to spend $1.5 billion on a program to protect U.S. user data and content from Chinese government access or influence, according to industry media. The plan would seal off U.S. operations, with all data stored within the country at Oracle, the U.S. tech firm. Oracle would have access to TikTok’s “algorithmic code and flag issues for government inspectors.”
The Biden Administration is giving TikTok an ultimatum: Either sever ties with China or be banned in the U.S. @sarafischer discusses pic.twitter.com/m11X7wmWPV
— The Lead CNN (@TheLeadCNN) March 16, 2023
But as MetaNews previously reported, the issue has become highly politicized. While TikTok CEO Shou Zi Chew is expected to testify on security issues before a House Committee on Energy and Commerce on Mar. 23, local lawmakers have already tightened their chokehold on foreign-owned tech companies.
Also read: TikTok Manipulates Own Algorithm to Promote Certain Landmarks
Earlier this month, the Biden administration endorsed proposed new legislation from about 12 senators that gives the secretary of commerce power to restrict tech firms based in six countries, namely Russia, Iran, North Korea, Venezuela, Cuba, and China. The U.S. considers all these countries “adversaries.”
It isn’t only Biden who is suspicious of TikTok. The app is also facing scrutiny in Canada, the UK, New Zealand and in the European Union. On Thursday, the UK banned legislators and other public officials from hosting the app on their work devices. And over 30 U.S. states have banned TikTok from being downloaded on state devices.
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