In a move to prevent an outright ban in the U.S., TikTok officials are exploring the option of splitting with China-based parent company ByteDance.
- TikTok separating from ByteDance would be a drastic move requiring approval from Beijing.
- The social-media company is under a security review from the Committee on Foreign Investment in the United States. So far, the investigation has not alleviated concerns about TikTok’s security, Forbes reports.
- If TikTok separates from ByteDance, the company could go public through an initial public offering. However, this separation is most likely a last resort if discussions with U.S. lawmakers fall through.
- TikTok’s U.S.-based division has an estimated value of $40 billion to $50 billion, Bloomberg reports.
- In response to concerns about security, TikTok agreed to bring in U.S. tech company Oracle to host its U.S.-based data.
Why it’s news
Criticism of TikTok is rapidly growing as multiple states ban the app on government devices and lawmakers present legislation to ban the app in the U.S.
Nearly 100 million Americans are TikTok users, making the U.S. market a significant part of TikTok’s business. The video-sharing app brought in around $11 billion in revenue last year.
The number of TikTok critics has grown in the past year as more revelations about the app’s lack of security come to light. More lawmakers have suggested that a TikTok ban is the best way forward.
A new bipartisan bill recently introduced by a dozen senators would give the Secretary of Commerce power to regulate and potentially ban foreign technology, including TikTok.
The Restricting the Emergence Of Security Threats That Risk Information and Communications Technology Act, or RESTRICT Act, allows the government to regulate technology from countries considered adversarial to the U.S., including China, Iran, Russia, Cuba, North Korea, and Venezuela.
The White House endorsed the bill, saying it is “a systematic framework for addressing technology-based threats to the security and safety of Americans.”
The bill does not explicitly mention the Chinese-based social-media platform TikTok, but several senators who introduced the bill repeatedly mentioned the dangers that TikTok poses to national security.
Just before the RESTRICT Act was proposed, Senator Marco Rubio (R-FL) announced legislation in the Senate explicitly intended to ban TikTok.
Backing up a bit
Committee Chair Cathy McMorris Rodgers announced that the TikTok CEO had been asked to appear before the committee to address lawmakers’ concerns with the social-media company. Rodgers claims that TikTok has knowingly allowed the Chinese Communist Party to access user data through the app.
“We’ve made our concerns clear with TikTok. It is now time to continue the committee’s efforts to hold Big Tech accountable by bringing TikTok before the committee to provide complete and honest answers for people,” Rogers says.