WASHINGTON - The Biden administration has demanded TikTok’s Chinese owners divest their stake in the popular video app or face a possible ban in the United States, the company said on Wednesday.

The move is the most dramatic in a series of recent steps by US officials and legislators who have raised fears that TikTok’s US user data could be passed on to China’s government.

China on Thursday called on the US to “stop unreasonably suppressing” TikTok, saying that the curbs reflect a business environment that discriminates against foreign companies.

“Data security issues should not be used as a tool for some countries to overstretch the concept of national security, abuse state power and unjustifiably suppress other countries’ enterprises,” Foreign Ministry spokesman Wang Wenbin said at a regular media briefing.

“The US has so far failed to produce evidence that TikTok threatens US national security,” he added.

ByteDance-owned TikTok has more than 100 million users in the US.

This is the first time under the administration of President Joe Biden that a potential ban on TikTok has been threatened.

Mr Biden’s predecessor, Mr Donald Trump, had tried to ban TikTok in 2020 but was blocked by the US courts.

TikTok spokesman Brooke Oberwetter said the company had recently heard from the US Treasury-led Committee on Foreign Investment in the United States (Cfius), which demanded that the Chinese owners of the app sell their shares and said that otherwise, they would face a possible US ban of the video app. 

The Wall Street Journal first reported the move.

ByteDance confirmed that 60 per cent of its shares are owned by global investors, 20 per cent by employees and 20 per cent by its founders.

Cfius, a powerful national security body, in 2020 had unanimously recommended that ByteDance divest TikTok. 

Under pressure from then president Trump, ByteDance in late 2020 unsuccessfully sought to finalise a deal with Walmart and Oracle to shift TikTok’s US assets into a new entity.

“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,” Ms Oberwetter said in a statement. 

The White House declined to comment.

TikTok chief executive Shou Zi Chew is due to appear before the US Congress next week.

Last month, the White House gave government agencies 30 days to ensure they do not have TikTok on federal devices and systems.

More than 30 US states have banned employees from using TikTok on government-owned devices.

Any US ban would face significant legal hurdles and potential political ramifications, since TikTok is popular with millions of young Americans.

Last week, Democratic Senator Mark Warner said it was important that the US government do more to make clear what it believes are the national security risks from TikTok.

“It’s going to be incumbent on the government to show its cards in terms of how this is a threat,” he said.

TikTok and Cfius have been negotiating for more than two years on data security requirements.

TikTok said it has spent more than US$1.5 billion (S$2 billion) on rigorous data security efforts and rejects spying allegations.

It said on Wednesday that “the best way to address concerns about national security is with the transparent, US-based protection of US user data and systems, with robust third-party monitoring, vetting and verification”.

Last week, the White House backed legislation by a dozen senators to give the administration new powers to ban TikTok and other foreign-based technologies if they pose national security threats.

It could give the Biden administration new ammunition in court if they sought to ban TikTok. 

White House National Security Adviser Jake Sullivan praised the bipartisan Bill, saying it “would strengthen our ability to address discrete risks posed by individual transactions, and systemic risks posed by certain classes of transactions involving countries of concern in sensitive technology sectors”.

The House of Representatives Foreign Affairs Committee in March voted along party lines on a much broader Bill aimed at Tiktok, sponsored by Republican Representative Michael McCaul, that Democrats said would require the administration to effectively ban TikTok and other subsidiaries of ByteDance. REUTERS, AFP