The government has issued an ultimatum to the Chinese-controlled company ByteDance, the majority shareholder of the social network TikTok. The Biden administration is calling for TikTok's Chinese owners to put their shares up for sale if they do not want the app to be banned on U.S. devices.
The Wall Street Journal published an exclusive article months after the Republican Party repeatedly asked the Biden administration to take serious measures against the social network controlled by the Chinese Communist Party. Several reports from government agencies have already claimed that TikTok poses a security risk.
The company that lies in the hands of China
According to the WSJ, the Committee on Foreign Investment (CFIUS), a working group affiliated with the Treasury Department, has made the demand for the sale to ByteDance. The Beijing-based company is headquartered in the Cayman Islands. According to its executive, 60% is owned by international shareholders, 20% by employees and another 20% by the company's founders.
According to Bloomberg, the U.S. market is worth between $40 billion and $50 billion to ByteDance. The company itself is valued at $220 billion according to an appraisal by the Emirati firm G42.
In late January, Shou Zi Chew, CEO of TikTok, appeared before Congress to respond to accusations that he provided information about U.S. users to the Chinese Communist Party. On Wednesday, the company stated that a forced sale would not help solve the problem regarding data processing security. Instead, TikTok pledged to invest $1.5 billion to improve data processing of North American users.
Banning the app
During the Trump administration in 2020, the Republican president forced the company to find an American buyer in order for the app to continue operating in the country. A judicial deadlock prevented President Trump from pushing through his ban. According to the WSJ, Biden could face the same problems as his predecessor.
The Senate is preparing new legislation that would strengthen the government's legal means to control foreign apps that may pose a security risk.
