The Biden administration and TikTok have drafted a preliminary agreement to address national security concerns posed by the Chinese-owned video app, but face hurdles on terms, as the platform negotiates to continue operating in the United States without major changes to its ownership structure, said four people with knowledge of the talks.
The two sides laid the groundwork for a deal in which TikTok would make changes to its data security and governance without forcing its owner, Chinese internet giant ByteDance, to sell it, three of the people said. who spoke on condition of anonymity because the negotiations are confidential.
The two sides are still arguing over the potential deal. The Justice Department is leading the negotiations with TikTok, and its No. 2 official, Lisa Monaco, fears the terms aren’t tough enough for China, two people with knowledge of the matter said. The Treasury Department, which plays a key role in approving deals that involve national security risks, is also skeptical that the potential deal with TikTok will sufficiently address national security concerns, two people said. knowing the subject. This could require changing the terms and dragging out a final resolution for months.
TikTok, one of the world’s most popular social media apps, has been under legal cloud in the United States for more than two years due to its ties to China. Lawmakers and regulators have repeatedly raised concerns about TikTok’s ability to protect US user data from Chinese authorities. President Donald J. Trump tried to force ByteDance to sell TikTok to an American company in 2020 and threatened to block the app.
If reached, a deal with the Biden administration is likely to be heavily watched, as TikTok has become a symbol of the Cold War atmosphere in relations between Beijing and Washington. Under tit-for-tat, nations fight for the primacy of technology and digital data. Skepticism about China is an integral part of American politics, and the talks are taking place just weeks before November’s midterm elections.
Reaching a deal may also be difficult at a delicate political time for the Biden administration, which has stepped up its cadence of criticism and executive action against China. The policy towards Beijing, although expressed in more diplomatic language, is not materially different from Trump’s White House posturing, reflecting a suspicion towards China that now spans the spectrum. Politics. Nonetheless, Republicans have criticized the administration for being too soft on China.
“Anything short of a complete separation” of TikTok from ByteDance “will likely leave significant national security issues around operations, data and algorithms unresolved,” said Sen. Marco Rubio of Florida, the principal Republican Intelligence Committee, in a statement.
TikTok has negotiated with representatives of the Committee on Foreign Investment in the United States, or CFIUS, a group of federal agencies that reviews investments by foreign entities in U.S. companies, to resolve concerns that the app puts endanger national security. The group is expected to sign a deal, and potentially President Biden as well.
A spokesman for the Treasury Department, which leads the group, said that generally speaking, the committee “pledges to take all necessary actions within its authority to safeguard the national security of the United States”.
TikTok declined to comment on the talks, but said it was “confident” it was “on track to fully satisfy all reasonable national security concerns of the United States.”
During a Senate hearing on social media and national security this month, Vanessa Pappas, TikTok’s chief operating officer, refused to commit to cutting off employees in China from the app’s US data. , but said any deal with the government would “address all national security concerns”. ”
A Justice Department spokeswoman declined to comment, as did a White House spokeswoman. ByteDance did not respond to a request for comment.
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Tensions on TikTok have been mounting for years. After Mr. Trump ordered ByteDance to sell the app or risk being blocked from Apple and Google’s app stores in 2020, the Chinese company appeared to reach an agreement to sell part of it. TikTok to Oracle, the American cloud computing company. But the deal was never done, and a federal court ruled against Mr Trump’s attempt to block the app.
This left the fate of TikTok in the hands of Mr. Biden. Last year, he issued an order quashing Mr Trump’s request to block TikTok. His administration has set out to develop a policy towards the app and others owned by foreign entities.
The Biden administration’s plans for TikTok swung back into the spotlight in June when BuzzFeed News reported that the company’s employees in China had access to U.S. TikTok data as recently as this year.
Negotiations between CFIUS and TikTok dragged on as officials wrapped their arms around complex technical questions about the app. They got closer to a detail agreement in recent months, said two people with knowledge of the talks.
Under the terms of the project, TikTok would make changes to three main areas, people familiar with the discussions said.
First, TikTok would store its US data only on servers in the US, likely run by Oracle, instead of on its own servers in Singapore and Virginia, two of the people said. Second, Oracle should monitor TikTok’s powerful algorithms that determine the app’s recommended content, in response to concerns that the Chinese government could use its feed as a way to influence the American public, they said. Finally, TikTok would create a council of security experts, reporting to the government, to oversee its operations in the United States, three knowledgeable people said.
BuzzFeed previously reported TikTok’s plans to store its data with Oracle; Axios previously reported that Oracle had started monitoring TikTok’s algorithms.
TikTok is represented in the negotiations by law firms Covington & Burling and Skadden, Arps, Slate, Meagher & Flom, people familiar with the matter said. Among the government officials negotiating a deal are Adam Hickey, a national security attorney with the Justice Department, two people with knowledge of the talks said.
Oracle is not directly involved in the negotiations but has been consulted by the government, another person said. Oracle declined to comment.
The terms of the draft deal are being reviewed by Ms Monaco and others, four people with knowledge of the matter said. A former national security official for Obama in the White House, Ms. Monaco has a reputation for taking a hard line on Beijing, which has, in part, slowed down a resolution, these people said.
Within the Biden administration, officials are approaching how to handle China differently. Treasury Secretary Janet L. Yellen is often seen as more dovish and has called for reducing some US tariffs on Chinese imports because of the burden they place on businesses and consumers. Others, like National Security Advisor Jake Sullivan, have called on the United States to take a close look at trade relations with China.
“President Biden doesn’t seem to be able to decide which side of his administration he wants to support,” said Derek Scissors, senior fellow at the conservative American Enterprise Institute, citing the administration’s perceived slowness in rolling out executive orders against China. .
Mr. Biden told CFIUS in an executive order this month that he would need to consider whether the deals would expose U.S. data to foreign adversaries.
The White House has also been working on two other executive orders to address concerns about China, a person with knowledge of the matter said. It would address concerns that US investors are putting money into Chinese companies, the person said. US companies have spent about $15 billion on deals in China so far this year, up from $21 billion in the same period last year, according to data firm Dealogic.
The second executive order could give the government more power to support apps that, like TikTok, could leak data to a foreign power.
Any resolution on TikTok would also most likely provide a blueprint for dealing with similar cases in the future, said Antonia Tzinova, a partner at law firm Holland & Knight who specializes in CFIUS and national security. “China is seen as a threat, and Big Data, or data in general, is of particular concern.
Kirsten Noyes contributed to the research.