TikTok could be banned in the US unless the app’s Chinese owners sell their stakes. The Biden administration is demanding it, WSJ reports.

• The US is threatening TikTok's Chinese owners with a US ban if they don't sell their stakes, according to the WSJ.
• TikTok has responded saying the forced sale won't address the perceived national security risk.

The Biden administration is threatening TikTok's Chinese owners with a potential US ban of the app if they don't sell their ownership stakes in the company, The Wall Street Journal reported Wednesday, citing people familiar with the matter.

The demand was recently made by the Committee on Foreign Investment in the US, also known as Cfius, the Journal noted based on the same people's comments.

The call on TikTok reflects a notable shift by the Biden administration, which has come under criticism from Republicans for not taking a strong enough stance against the national security threat posed by platform, the Journal noted.

TikTok is owned by Beijing-based ByteDance. Approximately 60% of the company's shares are owned by global investors, 20% of its shares owned by its employees, and another 20% of the company's shares belong to the owners — though the owners' shares carry outsized voting rights, the Journal said citing information from TikTok's executives.

A spokesperson for TikTok told Insider by email, "If protecting national security is the objective, divestment doesn't solve the problem: a change in ownership would not impose any new restrictions on data flows or access. The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing."

Still, TikTok's leadership is considering splitting from ByteDance to work around the national security concerns, Bloomberg reported. The divestiture would be the company's last resort; TikTok would likely only take up the option if its existing proposal is rejected by national security officials, Bloomberg said.

The ongoing war against TikTok

The Biden administration's current proposal is the latest escalation in an ongoing push against TikTok in the US. Officials worry that the company's Chinese leadership will facilitate ways for China to spy on or manipulate Americans.

Insider reported that House Foreign Affairs Committee Chair Michael McCaul compared TikTok to a spy balloon that sends sensitive data to the "mothership in Beijing" in February when he introduced a bill that would require the White House to ban TikTok or any app that may be subject to the influence of China. US officials are also worried that TikTok's parent company, ByteDance, could be forced to give the Chinese Communist Party access to US user data through China's National Intelligence Law, Insider reported.

Last year, TikTok agreed to implement several changes proposed by Cfius to address concerns from US officials under a plan called Project Texas, Bloomberg reported. The proposed plan includes appointing a three-person government approved oversight board and bringing software company, Oracle, to host US data and review TikTok's software, Bloomberg said.

In December, the Senate voted to ban TikTok on government devices, and several states have since introduced full or partial bans of the app. Universities have also made moves to ban TikTok.

Stronger data privacy laws could be an alternative

The national security discussion around TikTok may end up weeding out other fast-growing Chinese tech companies like Shein and Temu and could even affect American companies with footing in China, Insider reported.

And there's also the potential that China could retaliate against the US for going after one of its prized companies, Insider said.

One alternative might be to enact stronger data privacy laws in the U.S.

"We need to continue pursuing more secure technical standards and encryption," Milton Mueller, a cybersecurity program director at the Georgia Institute of Technology and coauthor of an Internet Governance Project report on TikTok and national security, previously told Insider. "That kind of security is something that I think both gives the users of the internet control without undermining the basic functioning of the internet and the globalization of the internet."