The Biden administration and TikTok have drafted a preliminary agreement to resolve 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 own. property structure, four people familiar with the discussions said.
The two sides have set the stage for a deal in which TikTok would make changes to data security and governance without requiring its owner, Chinese internet giant ByteDance, to sell them, said three of the people, who spoke to condition of anonymity because the negotiations are confidential.
The two sides are still discussing the potential deal. The Justice Department is leading negotiations with TikTok and its No. 2, Lisa Monaco, fears the terms are not strict enough for China, two people familiar with the matter said. The Department of the Treasury, which plays a key role in approving deals involving national security risks, is also skeptical that the potential deal with TikTok will sufficiently solve national security concerns, two people familiar with. question. This could force changes to the terms and drag a final resolution for months.
TikTok, one of the most popular social media apps in the world, has been under a 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 American 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 completed, a deal with the Biden administration is likely to be scrutinized very closely, as TikTok has become a symbol of the Cold War atmosphere in relations between Beijing and Washington. As part of the tit-for-tat, nations are fighting for primacy in digital technology and data. Skepticism towards China is an intrinsic feature of US politics and the talks take place just weeks before the November mid-term elections.
Completing a deal can also be difficult at a difficult political time for the Biden administration, which has stepped up its rate of criticism and enforcement action against China. The policy towards Beijing, although expressed in more diplomatic language, is not substantially different from the Trump White House stance, reflecting a suspicion towards China now spanning the political spectrum. However, Republicans criticized the administration for being too soft on China.
“Anything less than a complete separation” of TikTok from ByteDance “is likely to leave significant national security issues unresolved in operations, data, and algorithms,” Senator Marco Rubio of Florida, the top Republican on the committee, said in a statement. intelligence.
TikTok has negotiated with representatives of the Committee on Foreign Investment in the United States, or CFIUS, a group of federal agencies that examines investments by foreign entities in American companies, to resolve concerns that the app puts national security at risk. The group is expected to sign an agreement and potentially President Biden as well.
A spokesperson for the Treasury Department, who leads the group, said that, in general, the committee “is committed to taking 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” that it is “on track to fully satisfy all reasonable US national security concerns.”
In a Senate hearing on social media and national security this month, Vanessa Pappas, chief operating officer of TikTok, declined to pledge to cut employees in China from the app’s US data, but said any deal with the government “satisfied all national security concerns.”
A Justice Department spokesman declined to comment, as did a White House spokesperson. ByteDance did not respond to a request for comment.
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Tensions on TikTok have been increasing for years. After Trump ordered ByteDance to sell the app or risk being blocked by Apple and Google app stores in 2020, the Chinese company appeared to reach an agreement to sell part of TikTok to Oracle, the American cloud computing company. But the deal never ended, and a federal court ruled against 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 canceling Trump’s request to block TikTok. Its administration has decided to develop a policy towards the app and others owned by foreign entities.
The Biden administration’s plans for TikTok were brought back into the spotlight in June, when BuzzFeed News reported that the company’s employees in China only had access to US TikTok data this year.
Negotiations between CFIUS and TikTok dragged on as officials wrapped their arms around complex technical questions about the app. They’ve come close to a detailed deal in recent months, two people familiar with the discussions said.
Under the terms of the draft, TikTok would make changes to three main areas, people familiar with the discussions said.
First, TikTok would store its American data exclusively on servers in the United States, likely run by Oracle, rather than 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 may use its feed as a way to influence American audiences, they said. Finally, TikTok would create a council of security experts, which will report to the government, to oversee its operations in the United States, three experts said.
BuzzFeed previously reported TikTok’s plan to archive its data with Oracle; Axios previously reported that Oracle had begun to monitor TikTok’s algorithms.
TikTok is represented in the negotiations by the law firms Covington & amp; Burling and Skadden, Arps, Slate, Meagher & amp; Flom, people familiar with the matter said. Government officials negotiating a deal include Adam Hickey, a national security attorney at the Justice Department, two people familiar with 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 agreement are under review by Ms Monaco, among others, four people familiar with the matter said. A former Obama White House national security official, Ms. Monaco has a reputation for taking a hard line against Beijing, which, in part, has slowed down a resolution, these people said.
Within the Biden administration, officials approach how to handle China differently. Treasury Secretary Janet L. Yellen is often seen as more accommodating and has called for some US tariffs on Chinese imports to be reduced due to the burden they place on businesses and consumers. Others, such as National Security Advisor Jake Sullivan, have asked the United States to carefully examine trade ties with China.
“President Biden doesn’t seem to be able to decide which part of his administration he wants to support,” said Derek Scissors, a senior member of the conservative American Enterprise Institute, citing the administration’s perceived slowness in issuing executive orders against China.
Mr. Biden told CFIUS in an executive order this month that he should consider whether the deals would expose data from the US to foreign adversaries.
The White House has also worked on two other executive orders to address concerns about China, a person familiar with the matter said. It would address concern that American investors are investing money in Chinese companies, the person said. According to data firm Dealogic, 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.
The second executive order could give the government more power to hire apps that, like TikTok, could leak data to a foreign power.
Any resolution on TikTok would most likely “provide a blueprint” to handle similar cases in the future, said Antonia Tzinova, partner of the law firm Holland & amp; Knight specialized in CFIUS and national security. “China is perceived as a threat and Big Data, or data in general, is of particular concern.”
Kirsten Noyes contributed to the research.
