The Biden administration is in negotiations with TikTok to reach an agreement allowing the video-sharing platform to continue its operations in the US. However, discussions have hit a snag over concerns about the potential national security threat posed by the Chinese ownership of the company, according to sources familiar with the matter.
If an agreement is reached, it would permit TikTok to remain active in the US, but with additional restrictions on how data from American users is stored. The Committee on Foreign Investment in the US (CFIUS) began scrutinizing TikTok’s parent company ByteDance Ltd. and its merger with Musical.ly in 2019, leading to ongoing concerns.
The deal is pending clearance from various agencies within the committee, including the Justice Department. Deputy Attorney General Lisa Monaco has expressed reservations, suggesting that the proposed agreement may not sufficiently protect US user data from potential exploitation by Chinese entities.
While details of the agreement are confidential, sources suggest that TikTok’s data routing through Oracle Corp.’s cloud is part of efforts to address national security concerns. Regulators and lawmakers have long worried about the possibility of Chinese authorities accessing US user data through TikTok.
Despite having a smaller user base compared to some social media peers, TikTok is rapidly growing, particularly among young people. It holds the second-most-used app position among Gen Z users, and its ad business is expanding, with estimated revenues reaching $12 billion in 2023, up from $4 billion in 2021.
Critics, particularly China hawks on Capitol Hill, may push for a more stringent agreement, potentially involving the sale of TikTok to a US company. Senator Josh Hawley has called on Treasury Secretary Janet Yellen to sever all ties between TikTok and Chinese companies. Former President Donald Trump previously attempted to broker a deal for TikTok’s sale to a US buyer, but such efforts were inconclusive.
As negotiations continue, the administration is exploring additional measures, including a potential rule change by the Commerce Department to grant more oversight over apps owned by foreign adversaries. This change could empower the Commerce Department to mandate third-party audits for TikTok or impose restrictions on the platform within the US.
