TikTok's CEO Argues that a Sale is Insufficient to Address Security Concerns in Washington

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Shou Zi Chew, the CEO of TikTok, has stated that selling the popular video app to an American owner won't address the country's national-security concerns. In an interview, Chew said that TikTok's multibillion-dollar plan, which involves hiring Oracle Corp. to store American users' data and prevent Chinese influence over the app's content, is already a sufficient safeguard.

The Biden administration is reportedly demanding that TikTok's Chinese owners sell their stakes or face a possible U.S. ban of the app. Chew is set to testify before the House Energy and Commerce Committee next Thursday to make a case that TikTok can mitigate the national-security concerns expressed by American officials. The previous administration’s attempt to mandate a sale of TikTok to U.S. owners was thwarted in court after TikTok and parent company ByteDance Ltd. opposed a proposed federal ban.

The Biden administration’s recent action against the app could also face legal challenges, as TikTok may argue that a forced sale would be tantamount to a ban since the Chinese government is unlikely to permit the sale of the app’s algorithm along with it. TikTok has attempted to persuade U.S. officials through various tactics, including over a year of talks aimed at developing technical protections to isolate the app’s U.S. operations from its Chinese ownership. Although Beijing has yet to publicly comment on the prospect of a sale, it has indicated its intention to safeguard Chinese technology.

Shou Zi Chew, TikTok's CEO, has warned that a Chinese export ban could impede a potential sale of the company, as it could prevent the transfer of the video-sharing app's algorithm to a foreign buyer. This obstacle, combined with the risk of a Beijing veto, could undermine the likelihood of reaching an agreement with the US that doesn't require a complete divestiture of TikTok's Chinese ownership. Despite these challenges, TikTok has attempted to gain favor in Washington through negotiations with US officials and the retention of experienced advisers and lobbyists, spending $5.4 million on lobbying efforts in 2020 alone. TikTok's Washington staff has also expanded rapidly, with plans to move to its own offices currently under construction.