/TikTok hasn’t heard from the Trump administration in weeks, prompting latest CFIUS petition

TikTok hasn’t heard from the Trump administration in weeks, prompting latest CFIUS petition

The logos of the Chinese video portal TikTok and the US software and hardware manufacturer Oracle Corporation can be seen on a smartphone and screen on September 14, 2020 in Berlin, Germany.
Thomas Trutschel | Photothek | Getty Images

Remember TikTok? That wildly popular user-generated video application that dominated headlines for months as a potential national security threat because of its Chinese ownership?

It seems like President Donald Trump’s administration may have forgotten.

TikTok hasn’t had meaningful dialogue with the Trump administration’s committee on foreign investment in the United States (CFIUS) for weeks, according to people familiar with the matter. Executives at the company are still interested in completing a technology partnership with Oracle to satisfy national security concerns — even if President-Elect Joe Biden isn’t as concerned with TikTok’s risk profile under Chinese ownership. (TikTok’s parent company is ByteDance, based in China.) These people asked not to be identified discussing confidential matters.

A November 12 CFIUS deadline calls for ByteDance to “divest any tangible or intangible assets or property, wherever located, used to enable or support ByteDance’s operation of the TikTok application in the United States.”

But the CFIUS order doesn’t say what happens if ByteDance does not divest assets. That uncertainty prompted TikTok to file a petition in the US Court of Appeals for the D.C. Circuit Tuesday, calling for a review of actions by CFIUS.

“For a year, TikTok has actively engaged with CFIUS in good faith to address its national security concerns, even as we disagree with its assessment,” TikTok said in a statement. “In the nearly two months since the President gave his preliminary approval to our proposal to satisfy those concerns, we have offered detailed solutions to finalize that agreement – but have received no substantive feedback on our extensive data privacy and security framework.”

Trump has claimed that TikTok represents a national security threat because it collects American users’ data, which could then be accessed by the Chinese government. While TikTok continues to deny this, the company still wants to move forward with a deal to remove the issue of security as an overhang on the company, the people said.

Spokespeople for Oracle and the U.S. Treasury couldn’t be reached for immediate comment. A Biden technology advisor to the transition said it was “too early to say” Biden’s view on TikTok. Biden’s campaign told employees to delete TikTok off their work and personal devices due to security concerns in July.

The 12th of November

On Aug. 14, CFIUS released its ruling that ByteDance needed to divest its U.S. assets within 90 days, “unless such date is extended for a period not to exceed 30 days,” which hasn’t happened.

That mandate set off a chain of events. First, there was talk that ByteDance would sell all of its TikTok assets in the U.S., Canada, New Zealand and Australia assets to Microsoft or Oracle.

Then the Chinese government interrupted the transaction by demanding ByteDance get a license to sell TikTok to a foreign entity.

With the Nov. 12 deadline still pending, ByteDance instead agreed to sell 20% of a new U.S. based company called TikTok Global to Oracle, which was seeking a high-profile cloud customer, and Walmart, which was interested in the platform as a channel for e-commerce. That deal also named Oracle a “trusted technology provider,” which would have meant moving some TikTok functions to Oracle’s cloud. Oracle would also have beem able to check the source code of TikTok in the U.S., but Bytedance wouldn’t transfer algorithms and technologies to Oracle. 

That transaction, which President Trump approved on Sept. 19, never got clearance from the Chinese government. There was disagreement over the exact terms, with Trump and Oracle claiming that ByteDance wouldn’t retain any ownership over the new TikTok Global, and would instead divest its ownership to its American-based venture capital owners and other foreign backers. But ByteDance said it would still own 80%.

Since then, Trump tested positive for coronavirus on Oct. 2, sending him to the hospital, followed by weeks of election preparation. Those events have sidelined the TikTok deal.

TikTok is unclear when or if it will hear from the Trump administration again, two of the people said, prompting Tuesday’s petition. The Trump administration has a lot of legal flexibility around CFIUS and could still push to ban the application despite an Oct. 30 temporary injunction that blocks the government from banning the app. The ambiguity prompted TikTok to act now, one of the people said.

–CNBC’s Jordan Novet contributed to this report.

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