The indefinite delay, first reported by The Wall Street Journal, has been ordered by President Joe Biden’s administration, which is conducting a review of the conclusions about TikTok reached by Donald Trump. The former president, who waged a trade war with China and repeatedly referred to Covid-19 as the “Chinese virus,” characterized TikTok, which is owned by China-backed conglomerate ByteDance, as a security threat.
ByteDance has prevailed in multiple initial legal challenges to an executive order issued by Trump, who threatened to shut down TikTok unless it was sold to a U.S.-led concern. Executives from the company have held talks with U.S. officials regarding data collection by TikTok, whose usage has soared in the U.S. over the past couple of years. A central issue is whether the Chinese government will have access to data from U.S. users.
Biden’s plan, according to the Journal report, is to conduct a thorough review of the security aspects of the data collection.
“We plan to develop a comprehensive approach to securing U.S. data that addresses the full range of threats we face,” National Security Council spokeswoman Emily Horne told the Journal. “This includes the risk posed by Chinese apps and other software that operate in the U.S. In the coming months, we expect to review specific cases in light of a comprehensive understanding of the risks we face.”
One scenario under consideration would see a third-party data clearinghouse set up as an alternative to a sale of TikTok’s U.S. operations.
Wedbush Securities tech industry analyst Daniel Ives called the decision to put off the TikTok sale “a potential seminal moment for the Biden Administration” in terms of its overall stance on China. “We believe a Biden White House will take a much softer tone going forward in the eyes of the Street,” Ives wrote in a note to clients. “In his first 100 days, the TikTok situation could potentially be a litmus test for Biden’s first move toward ending the U.S./China Cold Tech War.”
A “friendlier tone” toward China would be a “bullish sign for the tech sector,” Ives added.