The Washington Post

Efforts to force sale of Tiktok face challenges

Biden is met with the same legal hurdles that doomed Trump’s ban


Three years after the Trump administra­tion failed to force the sale of Tiktok to an American buyer, the Biden administra­tion is trying again, charging forward into the same legal and constituti­onal minefield with just as little evidence that the short-video app poses an actual threat.

The Biden administra­tion’s push to force Tiktok’s Chinese owner Bytedance to sell off one of the world’s most popular apps has gained more bipartisan support than a similar Trump attempt in 2020, and the app has in recent years emerged as a major lightning rod for lawmakers unnerved by China’s technologi­cal prowess and social media’s effect on children and teens.

But it will likely face all the same challenges that doomed President Donald Trump’s bid in 2020, during which federal judges ruled the government had not provided proof that the app, which has more than 100 million U.S. users, presented enough of a national security risk to outweigh Americans’ First Amendment rights to free expression.

Bytedance, a Beijing-based tech company that says its shares are mostly owned by big internatio­nal investors, could also be blocked from selling Tiktok by the Chinese government, which added key pieces of its technology,

including its recommenda­tion algorithms, to an export-ban list during the Trump showdown — in an apparent attempt to fend off a sale in the future.

Adam Segal, a national security and Chinese policy expert at the Council on Foreign Relations, said he questioned how the U.S. government’s strategy would differ from Trump’s attempt, which fueled a geopolitic­al standoff and Chinese claims that the United States was attempting a “smash and grab.”

“I still don’t know what they think the outcome is going to be,” Segal said. “Many of the legal issues that Tiktok used to block the forced sale under the Trump administra­tion would still be relevant. And there’s still the high possibilit­y that the Chinese wouldn’t allow a sale.”

A forced-sale attempt would also be fraught because of TikTok’s high commercial value, which could make it challengin­g to find a buyer who could afford the Chinese owners’ costly stakes in the company, said Jim Lewis, director of the strategic technologi­es program at the Center for Strategic and Internatio­nal Studies.

The company has no public valuation, but some analysts expect it could surpass Youtube with more than $25 billion in ad revenue by 2025. Bytedance, which is estimated to be worth more than $200 billion, probably will not let it go without a costly legal fight.

The prolonged government investigat­ion into Tiktok, which began under the Trump administra­tion in 2019, has left Tiktok politicall­y “radioactiv­e,” Lewis said, and Tiktok could face an uphill battle in striking a deal that would appease Washington and Beijing among heightened tensions.

The situation has “an angry Chinese government, a deeply suspicious U.S. government and not a lot of options to get out of this mess,” Lewis said.

The app’s status as a Washington boogeyman has catapulted it to the center of a political storm, which CEO Shou Zi Chew is expected to confront in a congressio­nal hearing next week.

The government has argued that its owner’s roots in China could lead to the app being used for mass propaganda or espionage. But Tiktok and Bytedance have repeatedly disputed the claims, and federal officials have yet to provide any evidence that the Chinese government has accessed Americans’ data or meddled with Tiktok’s code.

White House press secretary Karine Jean-pierre told reporters Thursday that the Biden administra­tion is “concerned” about China’s use of online platforms in ways that could threaten national security or Americans’ safety, but stressed that the Committee on Foreign Investment in the United States (CFIUS), which approached the app pushing an option to divest, operates independen­tly of the White House.

“There’s a process here, and we try to stay away from that process,” Jean-pierre said. “CFIUS has a process that they’re going through. We’re going to let them

go through their process.”

The White House last week threw its support behind a bipartisan proposal, led by Sen. Mark R. Warner (D-VA.), that would allow the Commerce Department to review the potential risks of apps with links to certain foreign “adversary” countries, such as China, and order more official restrictio­ns or a nationwide ban.

Tiktok spokeswoma­n Brooke Oberwetter said divestment would not impose any new restrictio­ns on data access, and that the “best way” to address national security concerns would be a plan that would bring greater transparen­cy and third-party monitoring to its handling of U.S. users’ data.

CFIUS, a group of federal agencies in the Treasury Department that reviews business deals, has been negotiatin­g with Tiktok since 2019 on ways to address the government’s national security concerns.

Bytedance last year proposed a $1.5 billion restructur­ing plan, known as Project Texas, that would have subjected the company to close government scrutiny and third-party monitoring while allowing Bytedance to retain an ownership role. CFIUS officials, however, recently told the company that the mitigation agreement was not enough and that they wanted Bytedance to fully divest itself from Tiktok’s U.S. operation,

company officials said.

Five White House offices, including the National Security Council, can also participat­e in CFIUS discussion­s. The National Security Council and the Treasury Department declined to comment, and CFIUS has not responded to requests for comment.

The Biden administra­tion’s stance could face resistance from free-market advocates, who argued during the Trump bid that a heavy-handed approach could conflict with America’s traditiona­l attitudes to corporate competitio­n. But the sale order could come as a gift to Tiktok’s American competitor­s, including Snapchat owner Snap, and Facebook and Instagram’s parent company Meta, which has sought to portray Tiktok as a unique threat to American children through a media and lobbying campaign. Both companies’ stock prices climbed Thursday.

Absent a deal or an agreement from Bytedance to divest, Lewis expects Tiktok will be in the middle of “mud wrestling” between the two government­s. A spokespers­on for the Chinese Ministry of Foreign Affairs said Thursday at a news conference that “the U.S. has yet to prove with evidence that Tiktok threatens its national security” and that it “should stop spreading disinforma­tion about data security, stop suppressin­g

relevant companies, and provide an open, fair, just and nondiscrim­inatory environmen­t for foreign businesses to invest and operate in the U.S.”

The Biden administra­tion has more tools at its disposal to escalate pressure on Tiktok. It remains unclear whether federal officials would push to bar American companies from working with Bytedance or Tiktok, an aggressive measure that could starve the company of vital technologi­cal resources, including U.S. servers or software. The government adopted a similar approach against the Chinese telecommun­ications giant Huawei, cutting off its phones from being able to use basics, such as Google’s Android operating system, and almost entirely eradicatin­g Huawei’s phone business in the United States.

Tiktok has presented a political quandary for the Biden administra­tion as it seeks to navigate an increasing­ly tense relationsh­ip with China. The Biden administra­tion officially revoked Trump’s executive order banning Tiktok in 2021, saying it would instead launch a security review of many foreign-linked apps alongside a parallel push for a comprehens­ive national privacy law.

Federal officials’ claims of national security concerns have led to the app being banned on government-owned devices across

more than two dozen states and cities, including the public Wifi networks on college campuses. But the push for a broader privacy law has gone nowhere, even though the tech industry is largely unregulate­d and raises many of the same data-privacy and algorithmi­c-transparen­cy concerns as Tiktok.

Warner, head of the Senate Intelligen­ce Committee, praised CFIUS on Thursday for moving toward divestitur­e but said he remains unconvince­d the action would be enough.

“The devil is in the details, and I look forward to seeing them,” he said in a statement to The Washington Post. “This news also reinforces the need for my bipartisan legislatio­n to establish a comprehens­ive, rules-based approach to tackle foreign-based tech threats, with a full suite of tools that includes a potential ban.”

Warner told The Post last year that he questioned whether any mitigation effort would be enough to resolve Tiktok’s potential risks, calling it “one of the very few areas where Donald Trump may have been right.”

Tiktok has argued that a forced sale will not solve the bigger industry issues of data privacy or algorithmi­c oversight that its Project Texas plan was designed to address. But even some inside the company questioned whether the

proposed restructur­ing — which would have still left Bytedance ownership intact, although through a subsidiary whose leaders were chosen by CFIUS — would have been enough.

Bytedance managers in China still oversee the teams handling the Tiktok U.S. app’s design and engineerin­g, and U.S. workers still must rely on and communicat­e through Bytedance internal workplace tools, such as Lark, that would not have changed under the Project Texas plan.

The Biden plan echoes a similar move by CFIUS in 2019 to force a Chinese company, Beijing Kunlun Tech, to sell the popular gay dating app Grindr because of concerns that Americans’ personal data could be used for spying or blackmail. But even after Grindr’s sale to an American company, the app’s data was used for such purposes by a conservati­ve Catholic group that bought it to identify and track gay priests, a Washington Post investigat­ion found this month. No U.S. laws ban the sale of such data.

“If your top concern was the misuse of American citizens’ data, your top concern would be national data laws, not just banning Tiktok,” Segal said. Of Tiktok, he added, “there’s a sense they can’t win in the current domestic environmen­t, no matter what happens.”

 ?? Demetrius Freeman/the Washington Post ?? President Biden’s push to force Tiktok’s Chinese owner Bytedance to sell the app has gained bipartisan support but will likely be met with a slew of legal challenges. In 2020, federal judges ruled the government had not provided proof that the app presented enough of a national security risk to outweigh Americans’ First Amendment rights.
Demetrius Freeman/the Washington Post President Biden’s push to force Tiktok’s Chinese owner Bytedance to sell the app has gained bipartisan support but will likely be met with a slew of legal challenges. In 2020, federal judges ruled the government had not provided proof that the app presented enough of a national security risk to outweigh Americans’ First Amendment rights.

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