Biden Administration Demands TikTok’s Chinese Owners Divest Stakes or Face US Ban Amid National Security Concerns

Biden Administration Demands TikTok’s Chinese Owners Divest Stakes or Face US Ban Amid National Security Concerns

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Biden Administration Demands TikTok’s Chinese Owners Divest Stakes or Face US Ban Amid National Security Concerns

In this article, we’ll look at the reasons behind the US government’s recent demand for TikTok’s Chinese owners to sell their stakes or face a potential ban of the popular video-sharing app.

Key Takeaways:

  • US government demands that TikTok’s Chinese owners sell their stakes or face a potential ban
  • The Biden administration’s ultimatum reflects a shift in their stance on the platform’s national security threat
  • TikTok is contemplating breaking away from its parent organization, ByteDance, in order to tackle safety worries
  • The company has proposed a plan called Project Texas, which includes several measures to protect user data
  • Stronger data privacy laws in the US could be an alternative solution to the national security concerns
  • The future of TikTok in the US remains uncertain, with potential repercussions for both US and Chinese tech industries

US Administration Pushes for Divestment or TikTok Ban

The Biden administration has issued an ultimatum to the Chinese owners of TikTok: sell their ownership stakes or risk a ban in the US.

According to people familiar with the matter, the Committee on Foreign Investment in the US (Cfius) recently made this demand, reflecting a shift in the administration’s stance on the national security threat posed by the platform.

TikTok is owned by Beijing-based ByteDance, with about 60% of its shares owned by global investors, 20% by employees, and the remaining 20% by its founders, who have outsized voting rights. 

While TikTok’s management is considering separating from ByteDance to address national security concerns, a divestiture would be the company’s last resort and would only be undertaken if their existing proposal is rejected by US officials.

Ongoing Battle Against TikTok in the US

This recent development is the latest in a series of measures taken against TikTok in the US, as officials expressed concerns that the Chinese leadership could use the platform for espionage or manipulation. 

Comparisons have been drawn between TikTok and a spy balloon, with data from the app potentially being sent to the Chinese government.

To address these concerns, TikTok has agreed to implement several changes under a plan called Project Texas. 

This includes appointing a three-person government-approved oversight board and partnering with Oracle to host US user data and review the app’s software.

Stronger Data Privacy Laws as an Alternative

The national security debate around TikTok may impact other fast-growing Chinese tech companies, as well as American companies with a presence in China. 

There is also the possibility that China could retaliate against the US for targeting one of its most successful businesses.

One alternative to address these concerns might be the enactment of stronger data privacy laws in the US. 

Cybersecurity experts suggest pursuing more secure technical standards and encryption to protect user data and maintain the globalization of the internet.

The Future of TikTok in the US

As TikTok’s future hangs in the balance, the company is pushing for transparent, US-based protection of user data and systems, along with robust third-party monitoring, vetting, and verification. 

The Biden administration’s demand for divestment signals that Project Texas may not be enough to address security concerns.

While it remains unclear how Beijing would respond to a forced sale, the administration’s stance is likely to face renewed legal challenges, similar to those encountered during the Trump era. 

As the situation unfolds, the future of TikTok in the US is uncertain, with potential repercussions for both the US and Chinese tech industries.

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Written by

Alexander Sterling

Alexander Sterling

Alexander Sterling is a renowned financial writer with over 10 years in the finance sector. With a strong economics background, he simplifies complex financial topics for a wide audience. Alexander contributes to top financial platforms and is working on his first book to promote financial independence.

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Judith

Judith

Judith Harvey is a seasoned finance editor with over two decades of experience in the financial journalism industry. Her analytical skills and keen insight into market trends quickly made her a sought-after expert in financial reporting.