TikTok Seems to Be Moving Toward U.S. Security Deal. But Hurdles Remain

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By georgeskef

Under review is a draft agreement between the Biden administration and China to ensure that the video app, which is owned by China, continues to be available in the United States. This could lead to more negotiations.

Four people familiar with the discussions indicated that the TikTok and the Biden administration have reached a preliminary agreement to address national security concerns raised by the Chinese-owned video platform. However, the terms are still subject to change as the platform tries to continue operating in the United States, without any major changes to its ownership structure.

According to three people familiar with the matter, they have reached an agreement in which TikTok would implement changes to its data security, governance, and governance, without having to sell its owner, ByteDance the Chinese internet giant.

Both sides remain at odds over any potential agreement. Negotiations with TikTok are being led by the Justice Department and its No. Two people familiar with the matter stated that Lisa Monaco, the No. 2 official in TikTok’s negotiations, is concerned that the terms are too soft on China. Two people familiar with the matter say that the Treasury Department, which is responsible for approving deals involving national safety risks, is also skeptical about whether the potential deal with TikTok will adequately resolve those national security concerns. This could lead to changes in the terms that will delay a final resolution for several months.

TikTok is one of the most popular social media apps in the world. The US has had a legal cloud over it for more than two decades due to its Chinese connections. Regulators and lawmakers have repeatedly raised concerns regarding TikTok’s ability to protect American users’ data from Chinese authorities. Donald J. Trump attempted to force ByteDance sell TikTok an American company in 2020, and threatened the app.

As TikTok is a symbol for the Cold War-like atmosphere between Beijing and Washington, any agreement with the Biden administration will be closely scrutinized. The tit-fortat is a battle between the countries for technology and digital information primacy. The talks take place weeks before the midterm elections in November.

It may be challenging to reach an agreement in a difficult political moment for the Biden government, which has increased its criticisms and executive actions regarding China. Although the policy towards Beijing is expressed in a more diplomatic manner, it is not significantly different from that of the Trump White House. This is a reflection of a growing suspicion of China across the political spectrum. However, Republicans have criticised the administration’s softening of China.

“Anything less than a complete seperation” of TikTok and ByteDance will “likely leave significant national security problems regarding operations, data, and algorithms unresolved,” said Senator Marco Rubio, a top Republican on Intelligence Committee.

TikTok is currently negotiating with representatives of the Committee on Foreign Investments in the United States,, or CFIUS. This group of federal agencies reviews foreign investments in American companies and determines if the app poses a threat to national security. This group, as well as President Biden, would have to sign an agreement.

The Treasury Department’s spokesperson said that the committee is “committed to taking all necessary steps within its authority to protect U.S. security.”

TikTok declined comment but stated that it was confident it was on a path to satisfy all reasonable U.S. security concerns.

Vanessa Pappas was the chief operating officer of TikTok. She declined to cut employees in China from the app’s American data, but stated that any agreement with the government would “satisfy every national security concern.”

A spokeswoman from the Justice Department declined to comment as did one for the White House. ByteDance didn’t respond to a request.

For years, tensions have been building over TikTok. ByteDance was ordered by Donald Trump to sell the app. Otherwise, it would be blocked from Apple’s and Googles app stores in 2020. The Chinese company seemed to have reached an agreement with Oracle to sell a portion of TikTok. However, the deal was never completed and Mr. Trump’s attempt at blocking the app was blocked by a federal court.

This left TikTok’s fate to Mr. Biden. He issued an order last year that reversed Mr. Trump’s request that TikTok should be blocked. His administration was determined to create a policy towards the app and other apps owned by foreign entities.

In June, the Biden administration’s TikTok plans were brought back to the forefront when BuzzFeed News reported the company’s employees from China had access the U.S. data of TikTok as recently as this past year.

Negotiations between CFIUS TikTok and TikTok dragged on while officials tried to answer complex technical questions regarding the app. Two people familiar with the negotiations said that they had moved closer to an agreement in recent months.

According to the draft terms, TikTok would make three major changes, according to people who have knowledge of the discussions.

Two people confirmed that TikTok would store American data on servers in the United States. These servers are likely to be run by Oracle. They said that Oracle will monitor TikTok’s powerful algorithms, which determine what content the app recommends. This is in response to concerns the Chinese government might use its feed to influence American citizens. Three people who have knowledge of the matter said that TikTok would form a board consisting of security experts to oversee its U.S. operations.

Reuters, BuzzFeed reported TikTok’s plan to store data with Oracle. Axios reported that Oracle was monitoring TikTok’s algorithms.

People familiar with the matter say that TikTok is represented by Covington & Burling, Skadden Arps Slate, Meagher & Flom in negotiations. Two people familiar with the matter said Adam Hickey (a Justice Department national security attorney) is one of the government officials involved in negotiating a deal.

Although Oracle was not directly involved in negotiations, another source said that they had consulted the government. Oracle declined to comment.

Ms. Monaco is currently reviewing the terms of the draft agreement, according to four people familiar with the matter. These people stated that Ms. Monaco, an ex-White House national security official, is known for her hardline stance on Beijing. This has in part slowed down a resolution.

Officials in the Biden administration approach China differently. Janet L. Yellen, Treasury Secretary, is often regarded as more accommodating. has called to reduce U.S. tariffs against Chinese imports due to the burden they place upon companies and consumers. Jake Sullivan, the national security advisor, has called for the United States’ close scrutiny of commercial ties with China.

“President Biden doesn’t seem to be in a position to decide which side of the administration he wants,” stated Derek Scissors (a senior fellow at conservative American Enterprise Institute), citing the perceived slowness of the administration’s executive orders against China.

In an executive order this week, Mr. Biden stated to CFIUS that the agency should examine whether data deals could expose United States data to foreign adversaries.

According to a source familiar with the matter, the White House is also working on two additional executive orders to address China concerns. The person stated that one would address concerns about American investors putting money in Chinese companies. According to Dealogic, the U.S. has spent approximately $15 billion so far in China this year, as compared to $21 billion last year.

The second executive orders could give more power to the government to fight apps like TikTok that could leak data to foreign powers.

A resolution to TikTok will most likely provide a “planet” for future cases, according to Antonia Tzinova (a partner at Holland & Knight, who specializes on CFIUS, national security, and other legal matters). China is seen as a threat and Big Data (or data in general) is of particular concern.

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