Under Pressure, TikTok Reportedly Considers Splitting From ByteDance

TikTok's plan to appease U.S. regulators already gives the government more control over the platform than it has over U.S.-based tech companies.

The TikTok logo appear on a phone screen with an American flag reflected off of it.
Could TikTok become a U.S. company? NurPhoto via Getty Images

TikTok’s leadership is considering splitting from its Chinese parent company ByteDance to address U.S. national security concerns, Bloomberg reported. If TikTok splits from ByteDance, the video sharing business could either sell itself or launch on the public market. Separating the companies would be a last resort if TikTok’s existing proposal to appease regulators, which has been underway for two years, isn’t approved, according to Bloomberg.

The proposal, called Project Texas, gives the U.S. government and other third parties some control over TikTok’s algorithm and data usage. The video sharing company would house its algorithmic systems with Oracle, a U.S.-based technology company. TikTok has spent $1.5 billion on an Oracle data center, and it will cost the company an additional $700 million to $1 billion annually to maintain. The platform would also appoint members of the U.S. government to an oversight board under Project Texas.

The plan gives the U.S. government greater control over TikTok than it has over other U.S. tech companies, including Meta, Microsoft and Google. Forcing a divestment could result in less transparent data practices, because TikTok wouldn’t have to submit to a government oversight board or other third parties, as it would under Project Texas.

“If protecting national security is the objective, calls for a ban or divestment are unnecessary, as neither option solves the broader industry issues of data access and transfer,” said Brooke Oberwetter, TikTok spokesperson, over email. Oberwetter said Project Texas remains the best way to address security concerns.

The state of TikTok in the US

Calls to ban or regulate TikTok have spread through government and lobbying groups following the FBI’s warning that the platform could threaten U.S. national security. The app could share user data with the Chinese Communist Party or manipulate the algorithm for U.S. users to influence them, according to the FBI. TikTok has repeatedly denied these accusations. TikTok’s chief executive, Shou Zi Chew, is testifying in front of Congress on the platform’s relationship to China later this month.

Multiple pieces of legislation are working their way through the U.S. Congress that seek to ban, regulate or divest TikTok. Most recently, a House of Representatives committee voted to advance a bill that requires President Joe Biden to penalize TikTok if it knowingly transferred user data to someone working for the Chinese government. ByteDance admitted to using TikTok to track U.S. journalists in December.

The U.S. isn’t the only territory concerned with TikTok’s Chinese ownership. Earlier this month, the company discussed its proposal to safeguard data from European users, dubbed Project Clover. Similar to Project Texas in the U.S., TikTok is building data centers in Europe and hiring a third party to oversee European operations. It is unclear how divesting TikTok would impact non-U.S. countries.

Under Pressure, TikTok Reportedly Considers Splitting From ByteDance