DOJ to Push for TikTok Divestiture in Senate Briefings

(Bloomberg) -- Senior officials from the Justice Department and other agencies will hold closed-door briefings in the Senate this week to advance legislation that would allow TikTok to continue operating in the US while being severed from its Chinese owner, according to people familiar with the matter.

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Briefings to be held Tuesday and Wednesday, which haven’t been previously reported, come as the lobbying battle over controversial TikTok legislation moves to the Senate after surprise passage of a House bill last week that would force a sale or ban the app in the US.

The department’s push, led by Deputy Attorney General Lisa Monaco, is aimed at divestment of the popular video-sharing app from its Chinese parent ByteDance Ltd., as opposed to an outright ban in the US, said one of the people, who asked not to be identified speaking about confidential matters.

Monaco and other national security officials have been working behind the scenes with key lawmakers to pass legislation that would result in TikTok being divested and perhaps bought by US investors or an American entity, the person said.

The battle over TikTok represents one of several fronts in a broader campaign by the Justice Department that officials say is aimed at preventing China, Russia, Iran and other adversaries from using technology and data in illegal or harmful ways, especially when it comes to the risks of artificial intelligence.

“What we’ve seen is the asset that is being sought by our adversaries isn’t the brick-and-mortar institution,” Monaco said in an interview about data-security efforts. “The asset is the data itself.”

Monaco and other national security officials warn that TikTok is subject to Chinese national security laws that can require turning over data and algorithms to the state, raising the possibility that Beijing could obtain troves of information on US users or use the app to influence American politics.

TikTok Response

In response to materials shared privately by US officials with lawmakers, TikTok circulated a document titled “TikTok’s Response to DOJ,” which was reviewed by Bloomberg.

The company disputed the claim that TikTok having user data like name, age, phone number, email, IP address and general location amounts to the collection of tremendous amounts of sensitive information. The company said the information it has on users “is routinely collected by companies in order to provide access to online services.”

“Unlike some of its competitors, TikTok does not require users to disclose their real names, does not ask users about their employment or relationship status, and does not request that U.S. users disclose their precise geolocation information,” according to the document.

The company also said its algorithm for recommending content is stored on cloud servers maintained by its US partner, Oracle Corp., and that any changes to it are reviewed and managed by personnel in its US business unit. “No governments — including China or the United States — are influencing the TikTok algorithm,” the company said.

Why TikTok Faces a US Ban Over National Security: QuickTake

Efforts to separate TikTok from its Chinese parent have gained the most momentum in years since a failed bid by the Trump administration to ban the widely popular app, which boasts 170 million American users. Former US Treasury Secretary Steven Mnuchin said last week he’s speaking to potential investors to possibly acquire the app.

TikTok intends to exhaust all legal challenges if the latest US legislation targeting the app becomes law, Bloomberg has reported.

Under President Donald Trump, the US government oversaw an agreement under which ByteDance would have sold its American assets to a group led by Oracle. But ByteDance refused and the deal fell apart.

The House-passed bill calls for divestment within six months, but some senators, including Richard Blumenthal of Connecticut, have said that might not be enough time to line up a buyer. Other senators have said they want to see the bill go through a full amendment process and would be open to changes to improve it. The White House has also offered “technical assistance” aimed at changing the bill from the version that passed the House. Any such changes could slow its progress through Congress.

Data-Security Regulations

The Justice Department also is developing its first-ever regulations to prevent China and others from buying sensitive personal data about US citizens from commercial brokers as part of a White House executive order issued last month. Monaco said in the interview about the data-security regulations that the aim is to close a loophole that allows adversaries to buy certain categories of sensitive US personal and government data.

“I see this as part of a suite of tools that we have to address an evolving national security threat, which increasingly is data fueling the national security and military and intelligence apparatus of adversary nations,” Monaco said. “We are trying to be very deliberate and calibrated in addressing the national security threat without having unintended consequences on legitimate broad swaths of financial activity and commercial transactions.”

This month, Monaco and DOJ leaders warned companies at a legal conference in San Francisco that they won’t be able to hide behind the use of artificial intelligence algorithms to avoid prosecution when illegal activity occurs.

With regard to artificial intelligence, the department filed its first legal brief this month supporting a lawsuit against a US property management software company for allegedly using pricing algorithms to artificially inflate apartment rents.

--With assistance from Jamie Tarabay.

(Updates with multiple briefings in second paragraph, TikTok response.)

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