The Biden administration has asked TikTok's Chinese owners to sell their stake in the video-sharing app or face a possible US ban on the app, The Wall Street Journal reported Wednesday, citing people familiar with the matter.
The sale demand was recently made by the Committee on Foreign Investment in the United States (CFIUS), a multi-agency federal task force that oversees national security risks of cross-border investments, the report said.
Currently, 60% of ByteDance shares are owned by global investors, 20% by employees and 20% by the founders.
“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 spokeswoman Brooke Oberwetter said in a statement.
To mitigate the US government's national security concerns, TikTok has committed to spending $1.5 billion on a program to safeguard US user data.
“The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing,” Ms. Oberwetter said.
According to WSJ, it's unclear what the next step will be in the US, and it could be months before a resolution is reached.
TikTok's CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee next week to answer questions from lawmakers about security concerns.
Last week, the White House voiced support for a recent Senate bill that would grant the Biden Administration the ability to ban TikTok in the US
Following the news, shares in social media companies Snap and Meta jumped in after-hours trading.