Biden's TikTok ultimatum: Sever ties with China or face US ban

After US President Joe Biden and the Committee on Foreign Investment in the United States (CFIUS) spent years trying to work out a deal with TikTok that could address national security concerns, Biden seems to have given up. Yesterday, TikTok confirmed that the Biden administration issued an ultimatum to the app's China-based owners to either divest their stakes or risk a TikTok ban in the US, Reuters reported.

Biden's demand comes just one week before TikTok CEO Shou Zi Chew is scheduled to testify before the House Energy and Commerce Committee. The Wall Street Journal confirmed that Chew is already in the US and is working with "experienced Washington advisers" to help him defend TikTok against its harshest critics in Congress next Thursday.

Chew told The Journal that forcing a sale does not address national security concerns any better than the deal that TikTok had already worked out with the CFIUS. Under the deal that Biden seems to be shrugging off now, TikTok has already invested billions in moving its US users' data to US servers and hiring independent monitors to ensure that Americans' TikTok feeds can't be manipulated and that their data can't be accessed by China authorities.

"I do welcome feedback on what other risk we are talking about that is not addressed by this," Chew said. "So far, I haven't heard anything that cannot actually be solved by this."

TikTok seems unwilling to cave to Biden's demand. Chew told the WSJ that TikTok-maker ByteDance has recently considered an initial public offering of TikTok that would reduce China-based ownership but that executives have already decided that "it isn't the right time" to go that route. For now, it looks like the founders will be keeping their 20 percent ownership stake, including the "super shares" that "give them outsize voting rights" over global investors who own 60 percent of shares and employees who own the other 20 percent.

TikTok maintains that US fears over China accessing American user data are unfounded, and China agrees. After TikTok made Biden's demand public, a Chinese Foreign Ministry spokesman, Wang Wenbin, suggested at a news conference that the US was trying to limit the success of foreign companies by spreading misinformation about national security concerns that China says don't exist.

"The US hasn't been able to prove with evidence that TikTok threatens US national security," Wenbin said.

Yesterday, TikTok said that "the best way to address concerns about national security is with the transparent, US-based protection of US user data and systems, with robust third-party monitoring, vetting, and verification," Reuters reported.

The White House declined to comment on Reuters' report and has yet to respond to TikTok or China's concerns about the Biden administration's demand. But earlier this month, it seemed clear that Biden was stepping back from the table with TikTok when he provided input on a bipartisan bill that could make a TikTok ban--which courts previously blocked under the Trump administration--easier to defend in court.

Rather than targeting TikTok specifically, as a more divisive bill Congress is currently weighing would, the "Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT) Act" would grant US Commerce Secretary Gina Raimondo the power to ban TikTok or any other technology developed by a foreign adversary on personal devices if it was necessary to protect national security.

TikTok is still holding out hope that an alternative to divestment or a ban can be found, and Chew will have a chance to make that case before Congress next week.

"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 spokesperson Brooke Oberwetter said in a statement.

Sen. Mark Warner (D-Va.) told Reuters that the time has come for Biden to make clear what exactly Americans have to risk if TikTok remains under China-based ByteDance's ownership and isn't banned. "It's going to be incumbent on the government to show its cards in terms of how this is a threat," Warner told Reuters.