In brief: The United States is looking into TikTok's parent company, ByteDance, after critics and lawmakers have been criticizing its controversial policies and potential ties to the Chinese government. The company denies those claims, but it will have to convince regulators as well.
TikTok's meteoric rise hasn't been without its kinks, and at least two US senators have recently set off the alarm bell about the potential issues around parent company, ByteDance. A lot of younger people are drawn to work for the app -- even Facebook employees -- but all of this has also drawn the attention of regulators.
According to a new report from Reuters, the US Committee on Foreign Investment (CFIUS) has opened a national security review of ByteDance, a Chinese company that acquired lip-syncing app Musical.ly in 2017 for $1 billion and later rebranded it as TikTok.
The problem with the acquisition is that ByteDance didn't ask for approval from the CFIUS, so the committee now has "the scope to investigate it." Back in March, the CFIUS looked into Kunlun Tech's buyout of Grindr, and found that the foreign ownership had national security risks that were too high for comfort, so it pushed for a sale.
TikTok has been facing a lot of scrutiny as of late due to its alleged ties with the Chinese government and loose privacy guidelines, the latter of which have resulted in FTC fining it to the tune of $5.7 million. Then it was found that the app censored content related to the Hong Kong protests, which raised the eyebrows of two US senators who promptly called the practice into question in a letter they sent to intelligence agencies.
As for ByteDance, last week they published a statement defending itself against the scrutiny. They say TikTok didn't remove content "based on sensitivities related to China," and that it wouldn't do so if asked by the Chinese government.
The company explained that it doesn't operate in China and that US user data is stored locally with "backup redundancy in Singapore." And while it didn't comment on the "ongoing regulatory processes," the company believes it has "made clear that we have no higher priority than earning the trust of users and regulators in the US."