A new report alleges that Chinese firm ByteDance Studios is making efforts to distance its TikTok app from its other Chinese operations amid a probe by U.S. authorities.
Reuters reports that amidst a probe by the Committee on Foreign Investment in the United States (CFIUS), Chinese tech firm ByteDance Studios is attempting to separate its popular TikTok app from many of its Chinese operations. The firm is allegedly attempting to assure the CFIUS that user data from the TikTok app is stored on U.S. servers and will not be accessed by Chinese authorities.
CFIUS review deals between U.S. and foreign companies to ensure there are no national security risks and recently began an investigation into ByteDance’s $1 billion acquisition of the U.S. social media app Musical.ly in 2017, which was eventually rebranded as TikTok.
ByteDance appears to be attempting to avoid the same fate as Chinese gaming company Beijing Kunlun Tech Co Ltd which agreed in May to divest popular gay dating app Grindr following a request from CFIUS. The request was made due to worries about the security of personal user data, now the gaming company is exploring exiting the investment through an initial public offering.
In the third quarter of this year, ByteDance reportedly completed the separation of TikTok’s product and business development, marketing and legal teams from those of its Chinese social media app Douyin. Sources also alleged that the firm hired a consultant during the summer to carry out audits on the integrity of the personal data it stores.
The firm has stated that it stores U.S. user data in the United States with a backup in Singapore; the firm has also stated that Chinese authorities have no jurisdiction over TikTok data.
Nevena Simidjiyska, a partner at law firm Fox Rothschild LLP who advises companies on CFIUS reviews, commented on whether these changes will prove beneficial for ByteDance stating: “Shifting a company’s operations away from China, geographically and technically, can give CFIUS more comfort that the company is really independent of its Chinese owner and the Chinese government.”
Sen. Marco Rubio (R-FL) has previously called on the CFIUS to review the acquisition of social media app Musical.ly by TikTok owner Beijing ByteDance Technology Co. over claims that TikTok is used by the Chinese government to censor certain political content.
Rubio stated in a letter to Treasury Secretary Steven Mnuchin that Chinese-owned apps “are increasingly being used to censor content and silence open discussion on topics deemed sensitive by the Chinese Government and Communist Party.” The Treasury secretary heads the CFIUS, which reviews mergers such as that of Musical.ly and TikTok to ensure that they do not damage national security.
Rubio stated that there was evidence that TikTok in the United States was censoring political content that was “not in line” with the Chinese government. Rubio stated that China “is using these apps to advance their foreign policy and globally suppress freedom of speech, expression, and other freedoms that we as Americans so deeply cherish.” In one example, TikTok has blacklisted popular Christian app pray.com from advertising on its app.
Senate Minority Leader Charles E. Schumer (D-NY) and Sen. Tom Cotton (R-AR) asked the acting director of national intelligence, Joseph Maguire, to investigate the Chinese-owned social media app TikTok to determine if it poses “national security risks.”
TikTok has grown rapidly in the United States with about 60 percent of the apps 26.5 monthly active users coming from the U.S. where the app is primarily used by individuals aged between 16 and 24. It now appears that CFIUS has heard the Senators’ concerns and has launched an investigation into the Musical.ly acquisition, according to sources.