U.S. Government Pressing ByteDance to Sell TikTok

By
Kevin George
Kevin George
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Kevin George is a freelance crypto writer and editor for Investopedia. He holds a master's degree in finance and has extensive knowledge and experience in the area of trading, markets, and economics.
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Published March 16, 2023
In this photo illustration, the TikTok app is displayed on an Apple iPhone on August 7, 2020 in Washington, DC.

Drew Angerer / Getty Images

The U.S. government has reportedly asked the Chinese parent company of TikTok to sell its stake or face a possible ban.

Key Takeaways

  • The U.S. has told Chinese firm ByteDance to divest its TikTok stake or face a ban.
  • TikTok staff announced the news one day after threatening to split from its parent over security pressures.
  • The move could boost U.S. social media firms as users fret over a ban for the popular app.

The news comes a day after TikTok said it would consider splitting from ByteDance due to national security pressures. TikTok spokesperson Brooke Oberwetter confirmed to Reuters the company had been approached by the U.S. Committee on Foreign Investment in the United States (CFIUS).

The committee is led by the Treasury Department and is tasked with reviewing foreign investments in the U.S. President Biden expanded the scope of the CFIUS in September 2022 with Executive Order 14083 in light of the "evolving national security threat" that foreign technology poses.

The discovery of the Chinese surveillance balloon over the U.S. has galvanized moves to clamp down on TikTok. The app has been at the center of controversy in the U.S. for years.

Former President Trump tried to ban the app in 2020. That followed a report by U.S. think tank Peterson Institute for International Economics (PIIE) which called TikTok a "Huawei-sized problem". The U.S. government also tried to bring TikTok's American assets under a new entity led by Oracle (ORCL) and Walmart (WMT).

TikTok has since tried to allay the fears of U.S. lawmakers by moving all of its user traffic to Oracle’s cloud. The app's developers also gave Oracle the freedom to analyze some of its coding and infrastructure.

"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," Tiktok's Oberwetter said.

A ban on TikTok would likely boost the shares of Meta Platforms (META) and Snap Inc. (SNAP) with both apps also providing short-form video applications.

Research firm Insider Intelligence predicts TikTok will have about 835 million global monthly users by the end 2023, making it the third-largest social media network. The company also expects TikTok to grow its user base to almost 955 million monthly users by 2025.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. Reuters. "TikTok says US threatens ban if Chinese owners don't sell stakes".

  2. PIIE. "The Growing Popularity of Chinese Social Media Poses Risks".

  3. CBNC. "TikTok steps up efforts to clinch U.S. security deal".

  4. Insider Intelligence. "TikTok users worldwide (2020-2025)."

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