Mar 12, 2024 - Business

Congress is cracking down on TikTok because CFIUS hasn't

Illustration of a shrug emoji styled to resemble the TikTok logo.

Illustration: Brendan Lynch/Axios

Congress seems to relish its new role as TikTok antagonist, almost as if it's the exasperated parent of an app-addled teenager.

The big picture: This was supposed to be job of CFIUS, the federal inter-agency committee charged with evaluating the national security risks of foreign investments in the U.S. But CFIUS has been missing in action.

Zoom in: CFIUS got initial authority on this matter because TikTok is the result of a 2017 deal whereby China's ByteDance bought a startup called Musical.ly, which had significant U.S. operations.

  • CFIUS has been investigating that deal since at least 2020, when former President Trump unsuccessfully tried to force a TikTok divestiture via executive order.
  • This includes negotiations that resulted in Oracle securing all of TikTok's U.S. user data and vetting its algorithms and content moderation models, via what Oracle calls Project Texas, but CFIUS never signed off on a final agreement.
  • Moreover, a source close to the situation tells my Axios colleague Ashley Gold that there haven't been talks between CFIUS and TikTok for months.

State of play: If CFIUS wants ByteDance's Musical.ly deal unwound, thus effectively accomplishing the same goal as the pending legislation, it could make such a recommendation to President Biden. It also could affirm the Oracle deal or make another formal suggestion.

  • But there's no indication that it's done so, instead punting to Congress. Even though the divestiture bill might face a tougher test in the Senate than it has in the House.
  • The White House declined to comment.

The bottom line: CFIUS has its powers strengthened during the Trump administration, and has had a hearty appetite for wielding that sharper sword. Except when it comes to ByteDance and TikTok.

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