(Reporting by David Shepardson in Washington, Echo Wang in New
York, Josh Ye in Hong Kong, Laurie Chen in Beijing and Eva
Mathews in Bengaluru; Editing by Devika Syamnath, Daniel Wallis,
Leslie Adler and Edmund Klamann)
(Adds foreign ministry, paragraph 6)
By Echo Wang and David Shepardson
WASHINGTON, March 16 (Reuters) - The Biden
administration has demanded that TikTok's Chinese owners divest
their stakes in the popular video app or face a possible U.S.
ban, the company told Reuters on Wednesday.
The move is the most dramatic in a series of recent steps by
U.S. officials and legislators who have raised fears that
TikTok's U.S. user data could be passed on to China's
government. ByteDance-owned TikTok has more than 100 million
U.S. users.
It is also the first time under the administration of
Democratic President Joe Biden that a potential ban on TikTok
has been threatened. Biden's predecessor, Republican Donald
Trump, had tried to ban TikTok in 2020 but was blocked by U.S.
courts.
TikTok spokesperson Brooke Oberwetter told Reuters that the
company had recently heard from the U.S. Treasury-led Committee
on Foreign Investment in the United States (CFIUS), which
demanded that the Chinese owners of the app sell their shares,
and said otherwise they would face a possible U.S. ban of the
video app.
The Wall Street Journal first reported the move. ByteDance
confirmed that 60% of its shares are owned by global investors,
20% by employees and 20% by its founders.
China's foreign ministry responded on Thursday, saying that
the United States had yet to provide evidence that TikTok
threatened national security. Ministry spokesperson Wang Wenbin
told a daily briefing that the United States should stop
suppressing such companies.
CFIUS, a powerful national security body, had
unanimously recommended in 2020 that ByteDance divest TikTok.
Under pressure from then-President Trump, ByteDance in late 2020
unsuccessfully sought to finalize a deal with Walmart and Oracle
Corp to shift TikTok's U.S. assets into a new entity.
"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's Oberwetter said in a statement.
The White House declined to comment.
TikTok Chief Executive Shou Zi Chew is due to appear before
the U.S. Congress next week. It is not clear if the Chinese
government would approve any divestiture and the Chinese Embassy
in Washington did not immediately respond to a request for
comment.
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.
Any U.S. ban would face significant legal hurdles and
potential political ramifications, since TikTok is popular with
millions of young Americans.
Last week, Democratic Senator Mark Warner said it was
important the U.S. 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.
TikTok and CFIUS have been negotiating 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.
TikTok said on Wednesday 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."
Last week, the White House backed legislation by a dozen
senators to give the administration 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 sought to ban TikTok.
White House national security adviser Jake Sullivan praised
the bipartisan bill, saying it "would strengthen our ability to
address discrete risks posed by individual transactions, and
systemic risks posed by certain classes of transactions
involving countries of concern in sensitive technology sectors."
The House of Representatives Foreign Affairs Committee this
month voted along party lines on a much broader bill aimed at
Tiktok, sponsored by Republican Representative Michael McCaul,
that Democrats said would require the administration to
effectively ban TikTok and other subsidiaries of ByteDance.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.