US TikTok Faces Ban Risk... "Considering Separation Sale as Last Resort"

TikTok Executives to Appear at House Hearing on the 23rd

TikTok, the Chinese video-sharing platform under security review by U.S. authorities, is considering a last-resort option of corporate spin-off followed by a sale or initial public offering (IPO).

Bloomberg News reported on the 14th (local time), citing internal sources, that TikTok is discussing a plan to spin off from its Chinese parent company ByteDance to address security concerns within the United States.

The sources said that such a corporate spin-off, which could lead to a sale or IPO, is being considered as a last resort if the proposal submitted to U.S. authorities is not approved. However, they added that this plan would also require approval from the Chinese government.

TikTok, which is undergoing a security review by the Committee on Foreign Investment in the United States (CFIUS) under the U.S. Treasury Department that approves foreign investments in the U.S., agreed last year to implement various measures to alleviate security concerns within the U.S.

The plan, known as "Project Texas," includes storing U.S. user data on servers in the U.S. operated by Oracle, a U.S. enterprise software company, granting Oracle the authority to audit the content recommendation algorithm, and establishing a three-member oversight board appointed by the U.S. government.

However, sources said the review by CFIUS, composed of national security agencies, has reached a deadlock due to opposition from Department of Justice members, making it uncertain whether the plan will be approved.

[Image source=Reuters Yonhap News]

TikTok is also facing pressure from the U.S. Congress, including orders for corporate spin-offs. Several bipartisan bills supporting a TikTok ban or sale have been introduced by lawmakers concerned that TikTok might provide personal data to the Chinese government or be used as a tool of Chinese government influence.

TikTok executives are scheduled to testify at a hearing of the U.S. House Energy and Commerce Committee on the 23rd, addressing TikTok’s management of American users’ personal data and its relationship with the Chinese Communist Party.

TikTok spokesperson Brooke Oberwetter argued, "Banning TikTok or spinning it off from ByteDance does nothing to address national security concerns related to personal data." He added, "Under 'Project Texas,' the personal data of U.S. users will be maintained at a higher security level than any other company in the U.S."