TikTok continues negotiations with Washington on sale of US assets, legal cases put on hold

·4-min read

Despite the change in US administrations, TikTok is continuing negotiations with the federal government about a potential sale of its American operations and how to address national security concerns, according to a person familiar with the discussions.

The popular video-sharing app, owned by the Chinese tech giant ByteDance, has engaged in talks for months with the Committee on Foreign Investment in the US (CFIUS), an inter-agency entity led by the Treasury Department, after a review over how the app shares the data it amasses about its users.

Then-president Donald Trump first raised those national security concerns last summer and maintained a campaign for ByteDance to sell off TikTok’s US operations. The American tech giant Oracle Corp and retailer Walmart have been in talks with ByteDance for months to finalise a deal for these assets.

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On Wednesday, The Wall Street Journal reported that the sale to these buyers had been shelved indefinitely as the result of a Biden administration review.

But the discussions with CFIUS are continuing with little change under President Joe Biden’s administration, said the person, who spoke on condition of anonymity because the process is not public.

Also on Wednesday, Jen Psaki, the White House press secretary, denied any planned TikTok review, saying it was “not accurate to suggest there is a new proactive step by the Biden White House” concerning TikTok.

There is “no timetable for review of TikTok or other issues related to Chinese tech companies,” Psaki said. Reports about the TikTok sale being cancelled may be a “conflation of two ongoing processes” – the CFIUS negotiations and the lawsuits now pending in courts, she said.

The Biden administration asked a federal appeal court on Wednesday to put on hold the legal battle it inherited with TikTok, according to a Justice Department court filing.

How ByteDance’s US TikTok operations ended up in limbo

The Justice Department said the administration “has begun a review of certain recently issued agency actions” including the prohibitions in the TikTok appeal case. If approved, the government will provide updates on the case every 60 days.

As to the CFIUS process related to the sale, talks may drag on as discussions are fluid regarding how much of the company American buyers should own in order to address the data security issues, said the person.

CFIUS has said that American companies needed to own more than 50 per cent of TikTok’s US operations. Options may include adding the existing stakes owned by American hedge fund investors into the total to reach the threshold.

Walmart and TikTok declined to comment on the sale negotiations. Representatives at Oracle and the Treasury Department did not respond to requests for comment.

Sale negotiations have been choppy as judges in multiple lawsuits ruled against Trump’s proposed bans on national security grounds, saying the executive actions were unconstitutional. The cases are pending in appeal courts after federal judges Wendy Beetlestone in Philadelphia and Carl Nichols in Washington ruled in favour of TikTok and its users in three separate cases.

The court reprieves have allowed TikTok to dodge the bans, which were set to take effect in stages in September and November, and threw into question whether the assets sale would still be necessary.

While the executive actions were halted, a separate review continues as CFIUS examines the national security implications of TikTok’s 2017 Musical.ly purchase.

In early November, ByteDance said it had submitted four proposals to address US security concerns, including creating a new entity owned by Oracle, Walmart and existing US investors that would be responsible for handling TikTok’s US user data and content moderation.

The pace of the negotiation slowed significantly after the presidential election. After twice extending the deadline for the sale to December 4, the US let the final deadline slide without further extensions, although talks between the companies and government officials have not ended.

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