By The Washington Post · Drew Harwell, Tony Romm · NATIONAL, BUSINESS, WORLD, TECHNOLOGY, POLITICS, COURTSLAW, NATIONAL-SECURITY, ASIA-PACIFIC
The Committee on Foreign Investment in the United States, a cross-government group that reviews foreign transactions involving American firms, is investigating the 2017 deal in which the Beijing-based ByteDance bought a popular karaoke app, Musical.ly, for up to $1 billion, said the sources, who spoke on condition of anonymity because such probes are confidential.
The Washington Post reported last month that Sen. Marco Rubio, R-Fla., had requested such a probe. Two other lawmakers - Senate Democratic Leader Charles Schumer of New York and Republican Sen. Tom Cotton of Arkansas - have asked U.S. intelligence officials to commence their own review of TikTok on national security grounds, saying: "TikTok is a potential counterintelligence threat we cannot ignore."
"I remain deeply concerned that any platform or application that has Chinese ownership or direct links to China, such as TikTok, can be used as a tool by the Chinese Communist Party to extend its authoritarian censorship of information outside China's borders and amass data on millions of unsuspecting users," Rubio said in a statement Friday that praised CFIUS for the probe.
The app has quickly become a viral online hit, installed more than 1.4 billion times around the world and more than 120 million times in the U.S., according to data from mobile research firm Sensor Tower. In the first three quarters of the year, its U.S. downloads in the Apple and Google app stores have beaten or matched its more established rivals, Facebook, Snapchat and Instagram.
The Treasury Department declined to comment, citing federal law that prevents CFIUS cases from being disclosed to the public. Reuters on Friday first reported the review.
In response, TikTok pointed to its previous statements emphasizing its independence from China. The company has in recent weeks said it has never removed a video at the request of Chinese government officials while noting that U.S. users' data is stored here and that it is not subject to Beijing's surveillance laws.
Chaired by the treasury secretary, CFIUS has a wide-ranging investigative mandate and the power to retroactively terminate deals, implement fines or push corporate changes. The group also has the authority to review transactions long after they were finalized.
Richard Sofield, a partner at the law firm Wiley Rein and former Justice Department lawyer who oversaw national-security review of technology trade, said the review highlights CFIUS' increasingly aggressive role in scrutinizing deals governing Internet firms with global audiences.
"They're starting to home in on the concern about data companies, social media companies and their ability to influence the way people think," Sofield said.
The heightened scrutiny coincides with ongoing trade tensions between the U.S. and China, which have imposed rounds of tariffs on each other in the absence of a deal demanded by President Trump.
With TikTok, congressional lawmakers have grown increasingly concerned about the company's handling of political content and its approach to privacy. Their fears stem from the fact that TikTok is owned by a Chinese-based conglomerate, ByteDance, which must censor its services in that country to satisfy the government's strict censorship demands.