The walls are closing in on TikTok, with the company confirming reports that the U.S. wants it to shed its Chinese ownership or exit the U.S. market.
Frustratingly, the Treasury-led Committee on Foreign Investment in the U.S. made the demand behind closed doors. CFIUS has been investigating TikTok’s national security implications for years, and its failure to reach a conclusion has led to lawmakers trying to ban the ByteDance-owned app through legislative means. But whether out in the open or not, something is finally happening.
TikTok’s defense rests on Project Texas, its $1.5 billion program for getting on the right side of the American authorities—the European version is called Project Clover. Both schemes are supposed to demonstrate that TikTok is protecting Western data and minds from China’s spies and propagandists.
In the U.S., Oracle Cloud already hosts TikTok’s local data. The firm’s European data centers are also operated by third parties, but Project Texas has gone a step further by setting up a new subsidiary called TikTok U.S. Data Security, which TikTok proposes should be controlled by the U.S. government. The entity would control TikTok’s U.S. data access and content moderation, and its board would report to CFIUS.
Here’s TikTok spokeswoman Maureen Shanahan, responding to the new CFIUS reports: “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. 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.”
I’ve written before that this whole debate is riddled with hypocrisy, because U.S. intelligence can apply just as much pressure to Meta and Twitter as the Chinese Communist Party can apply to TikTok—as if to drive that point home, Austria’s data protection authority just ruled that European websites can’t legally use Facebook’s tracking technology because the resulting data would be susceptible to mass surveillance by U.S. intelligence. But even so, it’s reasonable for the U.S. to want to protect its citizens’ data from foreign spies.
If CFIUS is demanding an ownership change, Project Texas has clearly left it unimpressed. However, the opacity of this process makes it difficult to see what the problem is. On the face of it, those controls should stop TikTok from putting Americans at risk, even if ordered by the Chinese government to hand over their data or influence their opinions. Maybe CFIUS knows something about how the controls could be bypassed, but without a clearer picture of the outstanding issues, it’s just as reasonable to read this as the U.S. trying to protect Facebook and friends from their first serious overseas rival—which happens to come from the U.S.’s primary geopolitical rival.
Even if ByteDance were to agree to a sale, Beijing would need to agree—and it would be unlikely to let TikTok’s algorithm be part of the deal. There are many valid reasons to criticize TikTok, but in this instance, I can’t help but feel a bit sorry for a company that’s stuck in an impossible position.
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David Meyer
Data Sheet’s daily news section was written and curated by Andrea Guzman.
