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TikTok's future in the air as CEO faces Capitol Hill

Mar 23, 2023
Illustration of an anvil swaying back and forth above the Tik Tok app icon

Illustration: Natalie Peeples/Axios

TikTok's future in the U.S. is more cloudy than ever as CEO Shou Zi Chew faces Congress on Thursday in Washington, D.C.

Why it matters: TikTok's parent company, the Beijing-based ByteDance, has two options: Either sell the U.S. version of the popular social media app or face a countrywide ban.

  • The Biden administration strongly prefers the former over the political minefield that the latter would cause.
  • "The administration can achieve its national security goals without necessarily banning the app, including by ByteDance selling TikTok," a U.S. official tells Axios' Hans Nichols.

The other side: China would "resolutely oppose" a forced sale by the U.S., a spokesperson for Beijing's Ministry of Commerce said today.

The big picture: If ByteDance were to ever relent and consider a sale of the app, the company should have no shortage of suitors.

  • The app was almost sold back in 2020 after former President Donald Trump threatened a similar ban. Before the app reached a deal with Oracle and Walmart, Microsoft made an offer that was rejected.
  • That deal, which would have allowed ByteDance to retain majority control, never made it through, however, following multiple legal challenges and Trump's loss in the 2020 election.
  • TikTok has since worked with Oracle on Project Texas, a plan to separate its U.S. operations' backend functions and code from its Chinese arm.

What they're saying: TikTok has previously argued that divestiture wouldn't address the government's national security concerns.

  • "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," it said in a statement.
  • "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."

Between the lines: A divestiture of TikTok is more complicated than you think, given that a large percentage of ByteDance's shares are owned by global investment firms.

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