In October, three U.S. Senators called on the federal government to investigate Chinese owned social media company TikTok. Last Friday, the U.S. Department of the Treasury responded by launching a national security investigation into the Sino firm. Specifically, the Treasury’s Committee on Foreign Investment in the United States (CFIUS) is probing TikTok’s $1 billion purchase of a U.S app called Musical.ly back in 2017.
The CFIUS has the authority to investigate the acquisition of American companies by foreign corporations. Notably, ByteDance, the Chinese conglomerate that owns TikTok, did not seek the agency’s approval when buying Musical.ly. In August 2018, ByteDance shuttered Musical.ly and migrated its user base to TikTok, which launched in 2016.
At present, TikTok has more than 110 million users in the United States.
As CFIUS reviews are confidential, the present status of its investigation is unknown. However, confidential sources told Reuters the organization is working with ByteDance to find a way for it not to divest its Musical.ly assets.
Last year, CFIUS prevented Alibaba affiliate Ant Financial from purchasing MoneyGram International. The agency objected to the acquisition because it would endanger the personal data of U.S. citizens.
A TikTok spokesperson told the newsgathering organization, “While we cannot comment on ongoing regulatory processes, TikTok has made clear that we have no higher priority than earning the trust of users and regulators in the U.S.” The representative also confirmed the company is committed to working with Congress.
Notably, the current controversy is not the first time ByteDance has run afoul of U.S. regulators. In February, the Federal Trade Commission slapped TikTok with a $5.7 million fine for collecting data on underage users.
In early October, Senator Marco Rubio (R-FL) called on the Treasury Department to look into ByteDance’s acquisition of Musical.ly. The Congressman wanted the agency to determine if TikTok censored user content related to the ongoing Hong Kong protests. Moreover, later in the month, Senators Tom Cotton (R-AR) and Chuck Schumer (D-NY) expressed concern that the video sharing service might turn over user data to Beijing if requested.
The Chinese government legally requires all citizens and companies to comply with any requests made by its intelligence agencies.
In response, TikTok denied censoring content disliked by the Chinese government. The firm also noted that as it operates and stores data in the United States, it isn’t subject to Sino data-sharing regulations. Moreover, the corporation claimed it has not received any takedown requests from Beijing and would never honor such demands.
Last month I asked @USTreasury to conduct a CFIUS review of @tiktok_us. Because any platform owned by a company in #China which collects massive amounts of data on Americans is a potential serious threat to our country.
— Marco Rubio (@marcorubio) November 1, 2019
Nevertheless, U.S. lawmakers tweeted their support for the CFIUS’ inquiry. Senator Rubio wrote, “Any platform owned by a company in China which collects massive amounts of data on Americans is a potential serious threat to our country.”
Furthermore, Senator Schumer called the Treasury Department investigation “welcome news.” He also said TikTok’s possible subversion by Beijing represented a “potential national security concern we can’t ignore.” Besides, Senator Cotton greeted news of the CFIUS probe with two thumbs up emojis.
Senator Josh Hawley (R-MO), a noted technology industry critic, proposed Congress take a direct role in examining the firm’s operations. He invited representatives from TikTok and Apple to testify in front of Congress regarding their business ties to China. Both organizations declined to attend a November 5 hearing.