China’s TikTok needs US review over Musical.ly acquisition, says senator

Photo: Bloomberg

China’s ByteDance Inc. should be investigated by U.S. national security officials over its 2017 acquisition of a social media startup that’s behind the company’s popular video app TikTok, said Republican Senator Marco Rubio.

Rubio asked the Treasury Department in a letter Wednesday to review ByteDance’s purchase of Musical.ly, accusing the company of censoring content on behalf of the Chinese government and the Communist Party.

“The Chinese government’s nefarious efforts to censor information inside free societies around the world cannot be accepted and pose serious long-term challenges to the U.S. and our allies,” the Florida senator wrote.

ByteDance acquired Musical.ly for $800 million in late 2017 and soon after was merged with its TikTok app. Based in Shanghai and California and a hit in the U.S., Musical.ly was seen as a way for the Chinese company to expand abroad and to capitalize on an increasing appetite for short video.

Rubio’s request for a review by the Committee on Foreign Investment in the U.S., or Cfius, comes as the U.S. and China are locked in a trade war. This week, the U.S. blacklisted eight Chinese companies over alleged human rights violations

Cfius, led by the Treasury Department, reviews foreign acquisitions of U.S. businesses for security risks. It got enhanced authority last year to scrutinize overseas investments amid rising concern about Chinese purchases of U.S. technology firms. National security officials in the Trump administration have scuttled a number of Chinese investments.

Earlier this year, the panel forced the Chinese owner of gay-dating app Grindr to sell the app by June 2020. Although the committee doesn’t comment on its work, its intervention underscored that officials want to prevent foreign governments from collecting and exploiting sensitive data on U.S. citizens.

In a statement in response to Rubio’s letter, a TikTok representative said the Chinese government doesn’t request censorship of its content, and wouldn’t have jurisdiction because the company doesn’t operate there.

“TikTok U.S. is localized, adheres to U.S. laws, and stores all U.S. user data in the U.S. Our content and moderation policies are led by our U.S.-based team and are not influenced by any foreign government,” according to the statement. The company also said it’s considering forming a committee of industry organizations and experts to help it refine and assess its policies and increase transparency.

ByteDance has been under pressure from China’s notoriously sensitive censors. In April 2018, it was forced to shutter Neihan Duanzi, the popular joke-sharing app that helped launch its brand, and temporarily remove its Toutiao app from app stores.

Rubio has previously targeted Twitter Inc. for allegedly bowing to pressure from China. In June, he tweeted that the social media company was acting as a “censor” for the Chinese government. The social media company quickly apologized.

It would also not be the first time Musical.ly has been under scrutiny. In February, ByteDance was fined $5.7 million by the Federal Trade Commission to settle allegations that Musical.ly illegally collected information from minors.

Bloomberg