Chinese-owned TikTok was granted a 15-day extension by the Committee on Foreign Investment in the United States to get a possible deal approved by the U.S. government as the Trump administration wrangles with court battles against the video-sharing app and considers a possible ban.
Trump administration lawyers from Covington & Burling said that the D.C. District Court had instructed them to keep the judge apprised of any developments in the process related to TikTok, and the attorneys said that on Thursday they had granted a 15-day extension to the 90-day period specified in Trump’s Aug. 14 executive order related to TikTok’s Beijing-based parent company ByteDance acquiring a similar video-sharing app, Musical.ly, for $1 billion in 2017. That means the Treasury Department decision won’t need to be made until Nov. 27.
Musical.ly and TikTok merged in 2018. A letter from the committee to ByteDance in July said that “the national security risks arising as a result of the transaction include furthering the Chinese government’s ability to access and exploit TikTok user data on millions of Americans and promote a pro-Chinese Communist Party agenda in the United States through TikTok.”
The Trump administration labeled TikTok a national security threat due to concerns that the app could be exploited by the Chinese Communist Party to obtain U.S. user data illicitly. TikTok complained earlier this week about a “lack of clarity” and that it had been left in legal limbo by the Trump administration.
The deadline for the committee, which is headed by Treasury Secretary Steven Mnuchin, to approve TikTok’s continued operations in the U.S. was Thursday, after which a divestment order was set to go into effect. If implemented, it could have effectively banned the app in the country.
ByteDance rejected a purchase offer in September from Microsoft and Walmart, but a tentative agreement was reached that month among ByteDance, Walmart, and Oracle. The Chinese company would sell 20% of a newly created company called TikTok Global, to be based in the U.S., to Walmart and Oracle, with Oracle also becoming TikTok’s “trusted technology provider.” But the Chinese government also appeared to block the deal’s progress on its end, seemingly unhappy about relinquishing even some control over the Chinese company.
In September, Mnuchin said that “there are two processes that we’re going through — one is the CFIUS review; the other is the national security review under the president’s executive order.” He said the committee would review the TikTok-Oracle-Walmart proposal, “and then we will be making a recommendation to the president and reviewing it with him.” It is unclear what has happened since that time.
The Commerce Department backed off of a possible ban of TikTok on Thursday, citing a federal injunction from late October.
Judge Wendy Beetlestone, an Obama appointee, issued a ruling against the Trump administration in October, saying “a nationwide injunction is warranted” and that its TikTok ban should not be allowed to go into effect in the U.S. until she reaches a final judgment in a civil lawsuit brought against Trump by three TikTok users. The Justice Department appealed the ruling on Thursday.
“The spread in the United States of mobile applications developed and owned by companies in the People’s Republic of China continues to threaten the national security, foreign policy, and economy of the United States,” Trump said in his August executive order. “TikTok automatically captures vast swaths of information from its users, including Internet and other network activity information such as location data and browsing and search histories. This data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information.”
“There is credible evidence that leads me to believe that ByteDance … through acquiring all interest in Musical.ly …. might take action that threatens to impair the national security of the United States,” Trump’s Aug. 14 executive order concluded.
The Treasury Department’s rule on that same day stated that “not later than 90 days after the date of this order, unless such date is extended for a period not to exceed 30 days … ByteDance, its subsidiaries, affiliates, and Chinese shareholders, shall divest all interests and rights in 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.”
None of those rules have gone into effect.
A separate D.C.-based federal court issued an injunction in September against the Trump administration’s rules that would have removed TikTok from app stores, which the DOJ appealed in October.
ByteDance and TikTok have repeatedly claimed that they have not and would not turn over TikTok user data to the Chinese government, but national security experts have raised concerns about China’s 2017 national intelligence law, which requires all Chinese companies to assist Chinese intelligence services when asked and to keep it secret.
U.S. government officials, including John Demers, the assistant attorney general of the National Security Division, said a national security threat is posed by TikTok, and the Pentagon, other government agencies, and a host of organizations have banned employees from using the app.