US threatens to sanction Chinese parent company Byte Dance if it doesn’t sell shares

  • Washington has asked TikTok’s Chinese parent ByteDance to divest its stake in the short video app or face a ban in the US, CNBC has confirmed.
  • 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.
  • The US has several concerns about TikTok and the app poses a national security risk.

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

TikTok spokesperson Brooke Oberwetter said Reuters The company recently applied to the Committee on Foreign Investment in the United States (CFIUS). The committee told ByteDance to sell its stake in TikTok or face a US ban on the app.

Neither Oberwetter nor the US Treasury Department were immediately available for comment when contacted by CNBC.

A person familiar with the matter, who requested anonymity because of the sensitivity of the situation, told CNBC that TikTok has been contacted by CFIUS, but that the company is seeking further clarification from Washington.

The Wall Street Journal was first reported American action.

The US has several concerns about TikTok and the app poses a national security risk. Washington is concerned that US user data on TikTok could fall into the hands of the Chinese government if the companies are required to hand over information to Beijing because of a law in China. TikTok has repeatedly said it does not store US user data in China where those laws apply.

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Washington is also concerned that TikTok could be used for China’s influence activities.

A TikTok spokesperson said divesting the business would not address U.S. concerns.

“If the goal is to protect national security, debundling does not solve the problem: a change in ownership does not impose new restrictions on data flows or access,” the spokesperson said.

“The best way to address national security concerns is transparent, U.S.-based protection of U.S. user data and systems, along with the robust third-party monitoring, verification, and validation we already have in place.”

This is not the first time that TikTok has faced an outright ban, with former US President Donald Trump trying to ban the short video app in 2020 and then removing TikTok from Byte Dance. US courts blocked Trump’s efforts.

Washington has reportedly told TikTok that its Chinese parent company, ByteDance, must ditch the short video app or face a ban in the US.

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

So far these measures appear to have done little to calm US fears. In February, the White House gave government agencies 30 days to ensure that TikTok was not installed on official devices.

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