Sale of TikTok to Oracle, Walmart is protected according to Biden Reviews Security

Talks have continued between ByteDance representatives and U.S. national security officials, people said. These discussions have focused on data security and ways to prevent the Chinese government from accessing the information TikTok collects about U.S. users.

But no imminent decision is expected on how to resolve the issues related to TikTok, as the Biden administration determines its own response to the potential security risk posed by data collection from Chinese technology companies.

“We plan to develop a comprehensive approach to protecting U.S. data that addresses the full range of threats we face,” said National Security Council spokeswoman Emily Horne. “This includes the risk posed by Chinese applications and other programs operating in the United States. In the coming months, we look forward to reviewing specific cases in light of a full understanding of the risks we face.”

Trump last year ordered a ban on TikTok with the goal of forcing the sale of the popular video-sharing app to a predominantly American-owned group.

A few days later, the U.S. Foreign Investment Committee — an inter-agency group that oversees security risks in cross-border business — formally ordered ByteDance to withdraw from U.S. operations.

TikTok asked a Washington federal appellate court in November to overturn the divestment order, considering it arbitrary and capricious. TikTok said he was ready to discuss other ways to address government security concerns.

While this case is pending, separate federal court rulings have blocked the government from closing TikTok. The most recent December 7 ruling said Trump’s executive order probably exceeded his authority under the International Emergency Economic Powers Act.

Talks between the U.S. Foreign Investment Committee and TikTok to resolve the situation have continued, according to people familiar with the matter, one of whom said possible solutions include the use of a trusted third party to manage TikTok data, which does not require a direct sale.

Probably any deal would be different from what was discussed last September, according to people, in part because TikTok no longer faces the threat of imminent closure.

Any sale would also need the approval of Chinese regulators. Last year, Beijing adopted new restrictions on the export of certain types of social media algorithms using TikTok, further complicating trade negotiations.

ByteDance founder Zhang Yiming resisted the sale of TikTok last year despite calls from its large Western investors to do so. ByteDance, which has General Atlantic and Sequoia Capital among its sponsors, was valued at $ 180 billion in December, according to investment data research company PitchBook.

Zhang recently spoke with ByteDance employees worldwide, encouraging them to continue working and wait for the geopolitical storm to pass, according to employees interviewed by The Wall Street Journal.

Oracle, Walmart and others could still find a possible deal, people familiar with the situation said, but much depends on how the Biden administration carries out the anti-TikTok initiatives launched by the White House. Trump.

That answer could start to focus next week.

On Feb. 18, the government’s formal response to TikTok’s lawsuit against Trump’s executive order is due. The Justice Department declined to comment on whether he would continue to defend Mr. Trump’s order.

Also next week, another executive order signed by Mr. Trump will come into force that would ban U.S. transactions with eight China-related apps, including the Alipay mobile payment platform owned by Chinese billionaire Jack Ma’s Ant Group Co., and the WeChat mobile payment app owned by Tencent Holdings of China Ltd.

While the Biden administration could enforce the order, it could also extend the deadline, replace a new order, or simply cancel it directly.

Trump administration officials had claimed that Chinese technology companies such as ByteDance, Huawei Technologies Co. and others pose a threat to national security because they may be forced to share their data about Americans with the authoritarian Chinese government.

Companies have said they will never do so, but Mr. Trump’s concerns have been shared by both Democrats and Republicans in Congress.

The Biden administration review is led by officials who have sometimes been critical of Trump’s goal of Chinese technology companies, although they have expressed various opinions on how to respond to the complex challenge.

Jake Sullivan, Biden’s new national security adviser, and Kurt Campbell, his White House coordinator on Chinese policy, have publicly criticized Trump’s crackdown on Chinese technology companies like Huawei as unilateral and uncoordinated with other nations. westerners.

Protecting the technological advantages of the United States will require improved restrictions on China, as they wrote in a 2019 article in Foreign Affairs, “but these efforts should be pursued selectively rather than wholesale, imposing restrictions on technologies that are crucial to national security and human rights and allow trade and investment will continue for those that are not. “

They added that “excessive technological restrictions could lead other countries to China.”

Another Biden administration official who will likely help define the policy is Peter Harrell, who is now the senior director of the National Security Council for International Economics and Competitiveness.

Before taking office, Mr. Harrell applauded the suggestions for more lenient approaches to the problems presented by TikTok.

“I totally agree that the best way for the U.S. to deal with TikTok is for TikTok to become a leader in data transparency and privacy, rather than banning it,” Harrell posted last summer.

When the judicial challenges to the Trump initiative by TikTok and his allies began to succeed, Harrell cheered on those victories.

“I take the threat of Chinese surveillance seriously, but it’s good news that the courts are starting to push the unlimited executive branch,” he said in another tweet.

Whatever form a possible TikTok deal takes, it is unlikely to include the $ 5 billion education fund that Trump said Oracle and Walmart were preparing to create as part of the deal, according to one of the people familiar with the situation.

Trump had demanded buyers provide compensation to the government for forcing the sale, which he compared to key money — or an additional fee to insure hard-to-get property — that tenants sometimes pay landlords.

Walmart continues to work more closely with TikTok regardless of investment, focusing on warehouse supply and shipping for sales made through TikTok, as well as marketing initiatives that promote Walmart products within TikTok, according to others familiar with the situation.

—Georgia Wells, Sarah Nassauer, Raffaele Huang, and Liza Lin contributed to this article.

Write to John D. McKinnon at [email protected] and Alex Leary at [email protected]