TikTok’s management is discussing the possibility of divesting from its Chinese parent company ByteDance to help address concerns about national security risks.
A divestment measure that could lead to a sale or IPO is considered the last option and would only proceed if the company’s current proposal with U.S. national security officials is not approved, people familiar with the matter said.
TikTok, which is undergoing a national security review by the Committee on Foreign Investment in the United States (Cfius), agreed last year to implement measures to address national security concerns of U.S. officials. The program, known as the “Texas Plan,” includes bringing in U.S. tech giant Oracle to host U.S. user data and review its software, and appointing a government-approved three-member oversight board.
People familiar with the matter said the stalled review process by Cfius, an interagency body, has left TikTok unsure whether the proposal will be sufficient to support the company’s continued operations in the U.S. Other people familiar with the matter said Cfius members from the Justice Department have been reluctant to accept TikTok’s proposal.
TikTok also faces a flurry of potential legislative bills in the U.S. Congress, some of which would require separation. Lawmakers are concerned that the TikTok app could be forced to share data with the Chinese government or could be used as a tool for Beijing to exert influence. Some of the bills with bipartisan support in the U.S. call for banning the video-sharing app or forcing it to be sold.
“Neither banning TikTok nor divesting TikTok from ByteDance will address national security concerns regarding data transfers,” said TikTok spokesperson Brooke Oberwetter, “Under the Texas plan, our U.S. users’ TikTok data will be subject to much higher security standards than any comparable U.S. company.”
TikTok CEO Zhou Zuizi will testify next week before the House Energy and Commerce Committee on the app’s data privacy and security practices and the company’s ties to the Chinese Communist Party.