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President Joe Biden’s administration reportedly demanded that TikTok’s Chinese owners divest their stake in the popular application, failing which it would face a ban in the United States.
What Happened: The Committee on Foreign Investment in the U.S., or Cfius, made the demand for the sale in recent days, reported The Wall Street Journal, citing people familiar with the matter. The Committee has multiple agencies and oversees national security risk in international investments.
Republicans have criticized the Biden administration for not taking a stronger stance against the app owned by the privately held ByteDance Ltd.
TikTok reportedly said on Wednesday that such a forced divestment wouldn’t tackle the administration’s perceived security risk.
TikTok did not immediately respond to Benzinga’s request for comment.
See Also: How To Invest In Tech Startups
Why It Matters: According to TikTok executives, 60% of ByteDance’s shares are owned by global investors, 20% by employees, and 20% by the founders, reported the Journal.
TikTok said it had set aside $1.5 billion for a program to safeguard U.S. user data and content from Chinese government access or influence, according to the report.
Negotiations between Cifus and TikTok have reportedly been going on for over two years but are at a stalemate.
Former President Donald Trump tried to force a sale of TikTok to Microsoft, Oracle, and Walmart. More recently, the U.S. House Foreign Affairs Committee voted to give Biden the power to ban the app.
A recent Benzinga survey asked users to which app they would shift to if TikTok was banned: 38.3% chose Meta-owned Instagram, 14.8% said they would move to Facebook, 26.3% responded Twitter and 20.6% indicated a move to Snapchat.
Price Action: Shares of TikTok rivals Meta Platforms Inc META and Snapchat owner Snap Inc SNAP shot up 2.4% to $202.57 and 5.4% to $10.91, respectively, in after-hours trading.
On Wednesday, Meta shares closed 1.9% higher at $197.75 and Snap shares closed 0.2% lower at $10.35 in the regular session.
Read Next: UAE Spymaster Reportedly Buys Stake In TikTok At $220B Valuation Amid Possible US Ban
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Image and article originally from www.benzinga.com. Read the original article here.