The Biden administration and TikTok are working on an agreement that would let the video-sharing site keep operating in the US, but negotiations have stalled over concerns that the company’s Chinese ownership poses a national security threat, people with knowledge of the matter said.
Once reached, the agreement would allow the platform to continue operating in the US, though it would place additional restrictions on how data from US users is stored, said the people, who asked not to be named discussing a national security matter.
The app has been under scrutiny by US officials since 2019, when the Committee on Foreign Investment in the US — or Cfius — began reviewing a merger between the app’s parent company ByteDance Ltd. and Musical.ly.
The deal still needs to be cleared by some agencies that make up the committee, including the Justice Department, the people said. The department’s No. 2 official, Deputy Attorney General Lisa Monaco, is concerned the agreement doesn’t go far enough to keep the data of US users safe from Chinese actors, one of the people said.
The news about the pending agreement was reported earlier by the New York Times.
A spokesperson for the Treasury Department said Cfius is committed to taking all actions within its authority to safeguard national security, but doesn’t comment on transactions it may be reviewing.
“We will not comment on the specifics of confidential discussions with the US government, but we are confident that we are on a path to fully satisfy all reasonable US national security concerns,” a TikTok spokesperson said.
Regulators and lawmakers have long feared that Chinese authorities could access US user data via TikTok. These anxieties were revived following a report by BuzzFeed in June that US user data had been repeatedly accessed from China.
The same day as the BuzzFeed story, TikTok said it was routing all US user traffic through Oracle Corp.’s cloud, and that the database giant is auditing its algorithms. TikTok and Oracle are expected to continue working together on a storage setup that satisfies US national security concerns, according to a person familiar with the process.
While TikTok’s one billion active users makes it smaller than some of its social media peers, it’s growing quickly — particularly among young people. In June, the app was the second-most-likely used app among Gen Z users, trailing behind Instagram in the top spot, according to analysis from data.ai. It’s also swiftly building its ad business, with eMarketer estimating revenue of $12 billion this year, up from $4 billion in 2021.
China hawks on Capitol Hill are expected to criticize any agreement that stops short of forcing the sale of the platform to a US company. Senator Josh Hawley, a Missouri Republican, wrote to Treasury Secretary Janet Yellen last week urging her to require TikTok to sever all ties with Chinese companies and to force ByteDance to divest itself from TikTok.
Hawley hasn’t yet received a response from the department, though Treasury has acknowledged receipt, according to Philip Letsou, Hawley’s communications director.
Former President Donald Trump stopped short of banning the app in an effort to broker a deal to sell the platform to a US buyer, which never came to fruition. ByteDance had sought US approval to sell a stake in the app to Oracle and Walmart Inc., but the transaction didn’t materialize. Efforts by the Trump administration to boot TikTok from the Apple and Google app stores were blocked by a US court.
A top TikTok executive told senators this month that the company is negotiating with US officials on restricting access to US data for employees in China but declined to commit to a total cutoff.
As the Cfius review process continues, the administration is weighing other action, including by the Commerce Department, which is considering a rule that would give the Commerce Secretary more oversight over apps owned by foreign adversaries. If enacted, the rule change would empower the Commerce Department to force TikTok to undergo third-party audits — or even restrict the app in the US.