- The Washington Times - Monday, August 3, 2020

The Committee on Foreign Investment in the United States has directed the Chinese-owned ByteDance to divest TikTok’s U.S. operations, according to ByteDance founder Zhang Yiming.

Mr. Yiming told employees on Monday that his company had cooperated with CFIUS for nearly a year and disagreed with its conclusion but is quickly searching for a way to maintain the video app’s platform in the U.S., according to an email to employees obtained by the Beijing-based Pandaily.

“We do not yet know the exact details of what our end solution will be,” Mr. Yiming said in the email. “Candidly, it is unlikely that the level of interest and speculation around TikTok will cease in the short term, and I recognize that this can be very distracting.”

CFIUS is a U.S. government body led by Treasury Secretary Steven T. Mnuchin that reviews commercial transactions for potential national security problems, and its purview was broadened by the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA).

Microsoft is in advanced talks to take over TikTok’s U.S. operation, which should satisfy CFIUS’s concerns.

China has reacted angrily to the move, targeting one of the first Chinese social media outlets to earn a global market, particularly with young Americans.

“Banning TikTok reflects Washington’s cowardice,” the state-controlled Global Times wrote in an editorial in Beijing on Monday, saying the Trump administration’s move “echoes the sense of crisis instigated by some U.S. elites when facing China’s rise.”

President Trump said Monday he gave Microsoft the green light to pursue purchasing TikTok and would shut the app down by Sept. 15 if no deal is done.

“A very substantial portion of that price is going to have to come to the Treasury of the United States,” the president said. “It’s a great asset, but it’s not a great asset in the United States unless they have the approval of the United States.”

Ultimately, any acquisition will need the approval of CFIUS, which formed in 1975 and has long been used as a tool to monitor foreign investments.

In 2006, CFIUS attracted attention after the foreign-owned Dubai Ports World sought to purchase six U.S. ports and then-President George W. Bush threatened to veto any action by Congress to undo the deal. Dubai Ports World ultimately dropped the deal.

In the Trump era, CFIUS was reinvigorated by FIRRMA and Mr. Trump’s overhaul of its resources. After FIRRMA took effect, CFIUS received 229 notices of covered transactions in 2018, which was a large uptick over the 138 notices it examined in 2007, according to the Treasury Department.

Richard Sofield, who spent a decade overseeing the Justice Department’s participation in CFIUS, said CFIUS’s action on TikTok did not come as a surprise to those who continue to interact with it regularly as he does from the law firm Wiley Rein.

“The government has been very vocal about Sensitive Personal Data as a national security concern,” Mr. Sofield said in an email. “Additionally, we have seen the administration react to social media platforms that could be used as a means for shaping political discourse such as the administration’s efforts through a recent executive order aimed at U.S. social media companies such as Twitter.”

CFIUS’s crackdown on TikTok could be a harbinger for the Trump administration adopting more innovative ways to curtail Chinese influence in the U.S. marketplace.

Assistant Secretary of the Treasury Thomas Feddo said last month that CFIUS has added staff to focus on information technology and investment security, and has collected filing fees at an unprecedented level — $1 million since May.

The maneuvering for a Microsoft takeover of TikTok ramped up quickly.

Microsoft CEO Satya Nadella spoke with Mr. Trump about the company’s desire to acquire TikTok after Mr. Trump told reporters last week that he would be “banning” TikTok.

“Microsoft fully appreciates the importance of addressing the president’s concerns,” the company said in a statement on Sunday. “It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Microsoft said it plans to complete its discussions to take control of TikTok by the Sept. 15 deadline, at which point it will determine whether it can acquire TikTok.

Microsoft won a powerful ally in Senate Minority Leader Charles E. Schumer on Monday.

“A US company should buy TikTok so everyone can keep using it and your data is safe,” the New York Democrat tweeted. “This is about privacy. With TikTok in China, it’s subject to Chinese Communist Party laws that may require handing over data to their government. A safe way must be found for TikTok to continue.”

GOP lawmakers also want to play a role in the government’s review of TikTok.

The top-ranking Republicans on the House Energy and Commerce Committee wrote on Monday to Secretary of State Mike Pompeo to request a classified briefing on TikTok and its connection to the Chinese Communist Party.

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