U.S. steps up campaign to purge ‘untrusted’ Chinese apps

By Humeyra Pamuk and David Brunnstrom

WASHINGTON (Reuters) – The Trump administration said on Wednesday it was stepping up efforts to purge “untrusted” Chinese apps from U.S. digital networks and called the Chinese-owned short-video app TikTok and messenger app WeChat “significant threats.”

U.S. Secretary of State Mike Pompeo said expanded U.S. efforts on a program it calls “Clean Network” would focus on five areas and include steps to prevent various Chinese apps, as well as Chinese telecoms companies, from accessing sensitive information on American citizens and businesses.

Pompeo’s announcement comes after U.S. President Donald Trump threatened to ban TikTok. The hugely popular video-sharing app has come under fire from U.S. lawmakers and the administration over national security concerns, amid intensified tensions between Washington and Beijing.

“With parent companies based in China, apps like TikTok, WeChat and others are significant threats to personal data of American citizens, not to mention tools for CCP (Chinese Communist Party) content censorship,” Pompeo said.

In an interview with state news agency Xinhua on Wednesday, Chinese foreign minister Wang Yi said the United States “has no right” to set up the “Clean Network” and calls the actions by Washington as “a textbook case of bullying”.

“Anyone can see through clearly that the intention of the U.S. is to protect it’s monopoly position in technology and to rob other countries of their proper right to development,” said Wang.

TikTok currently faces a deadline of Sept. 15 to either sell its U.S. operations to Microsoft Corp. or face an outright ban.

In the run-up to Trump’s November re-election bid, U.S.-China ties are at the lowest ebb in decades. Relations are strained over the global coronavirus pandemic, China’s military buildup in the South China Sea, its increasing control over Hong Kong and treatment of Uighur Muslims, as well as Beijing’s massive trade surpluses and technological rivalry.

Pompeo said the United States was working to prevent Chinese telecoms firm Huawei Technologies Co Ltd from pre-installing or making available for download the most popular U.S. apps on its phones.

“We don’t want companies to be complicit in Huawei’s human rights abuses, or the CCP’s surveillance apparatus,” Pompeo said, without mentioning any specific U.S. companies.

Pompeo said the State Department would work with other government agencies to protect the data of U.S. citizens and American intellectual property, including COVID-19 vaccine research, by preventing access from cloud-based systems run by companies such as Alibaba, Baidu, China Mobile, China Telecom, and Tencent.

Pompeo said he was joining Attorney General William Barr, Secretary of Defense Mark Esper, and Acting Homeland Security Secretary Chad Wolf in urging the U.S. telecoms regulator, the Federal Communications Commission, to terminate authorizations for China Telecom and three other companies to provide services to and from the United States.

He said the State Department was also working to ensure China could not compromise information carried by undersea cables that connect the United States to the global internet.

The United States has long been lobbying European and other allies to persuade them to cut out Huawei from their telecommunications networks. Huawei denies it spies for China and says the United States wants to frustrate its growth because no U.S. company offers the same technology at a competitive price.

Pompeo’s comments on Wednesday reflected a wider and more accelerated push by Washington to limit the access of Chinese technology companies to U.S. market and consumers and, as one U.S. official put it, to push back against a “massive campaign to steal and weaponize our data against us.”

A State Department statement said momentum for the Clean Network program was growing and more than 30 countries and territories were now “Clean Countries” and many of the world’s biggest telecommunications companies “Clean Telcos.”

It called on U.S. allies “to join the growing tide to secure our data from the CCP’s surveillance state and other malign entities.”

Huawei Technologies and Tencent declined to comment. Alibaba, Apple, China Telecom, China Mobile and Baidu did not immediately respond to requests for comment.

(Reporting by Humeyra Pamuk, David Brunnstrom and Matt Spetalnick; Additional reporting by Yew Lun Tian and Yingzhi Yang in Beijing, Josh Horwitz in Shanghai, Pei Li in Hong Kong and David Kirton in Shenzhen; Editing by Mary Milliken, Rosalba O’Brien and Michael Perry)

Trump: U.S. should get ‘substantial portion’ of TikTok operations sale price

By David Shepardson and Jeff Mason

WASHINGTON (Reuters) – U.S. President Donald Trump said Monday the U.S. government should get a “substantial portion” of the sales price of the U.S. operations of TikTok and warned he will ban the service in the United States on September 15 without a sale.

The turnaround came after Trump Friday he said he was planning to ban the Chinese-owned video app’s U.S. operations as soon as Saturday after dismissing a possible sale to Microsoft.

Reuters reported last week that some investors are valuing TikTok at about $50 billion, citing people familiar with the matter.

“I did say that if you buy it, whatever the price is that goes to whoever owns it, because I guess it’s China essentially … I said a very substantial portion of that price is going to have to come into the Treasury of the United States because we’re making it possible for this deal to happen,” Trump said.

It was not clear how the U.S. government would receive part of the purchase price.

He added it “will close down on September 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal so the Treasury … of the United States gets a lot of money.

Daniel Elman, analyst at Nucleus Research, said a sale “could foreshadow a growing wave of U.S. company acquisition of Chinese internet properties, particularly if the geopolitical tensions continue to mount.”

Elman said that could impact Tencent’s WeChat.

Secretary of State Mike Pompeo referenced WeChat on Sunday and said Trump “will take action in the coming days with respect to a broad array of national security risks that are presented by software connected to the Chinese Communist Party.”

U.S. officials have said TikTok poses a national risk because of the personal data it handles. TikTok CEO Kevin Mayer said in a blog post last week that the company was committed to following U.S. laws and was allowing experts to observe its moderation policies and examine the code that drives its algorithms.

Trump’s comments confirmed a Reuters report Sunday that he had agreed to give China’s ByteDance 45 days to negotiate a sale of popular short-video app TikTok to Microsoft.

Trump, a former New York real estate developer, compared TikTok to the landlord tenant relationship, suggesting TikTok is like a tenant. “Without a lease, the tenant has nothing – so they pay what’s called key money or they pay something.”

He said he did not mind “whether it’s Microsoft or somebody else – a big company, a secure company, very, very American company buy it.”

Microsoft said Sunday that CEO Satya Nadella had spoken to Trump and “is prepared to continue discussions to explore a purchase of TikTok in the United States.”

Microsoft said Sunday it is “committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”

Many prominent Republicans, including House Republican Leader Kevin McCarthy, issued statements in support of a Microsoft acquisition of TikTok’s U.S. operations. Some congressional aides are worried about a backlash by younger voters against the party if Trump banned TikTok, which has 100 million American users.

Microsoft and TikTok parent ByteDance gave the U.S. government a notice of intent to explore a preliminary proposal for Microsoft to purchase the TikTok service in the United States, Canada, Australia, and New Zealand.

U.S. Senate Democratic leader Chuck Schumer also backed the sale, while a senior White House adviser raised concerns about a sale to Microsoft.

“A U.S. company should buy TikTok so everyone can keep using it and your data is safe,” Schumer said on Twitter, adding: “This is about privacy. With TikTok in China, it’s subject to Chinese Communist Party laws that may require handing over data to their government.”

White House trade adviser Peter Navarro suggested on Monday that Microsoft could divest its holdings in China if it were to buy TikTok.

“So the question is, is Microsoft going to be compromised?” Navarro said in an interview with CNN. “Maybe Microsoft could divest its Chinese holdings?”

Navarro said the Chinese government and military use Microsoft software “to do all the things they do.”

(Reporting by David Shepardson, Doina Chiacu, Susan Heavey, Alexandra Alper, Echo Wang, Greg Roumeliotis, Paresh Dave and Pete Schroeder; Editing by Nick Zieminski and Lisa Shumaker)

U.S. Treasury to make recommendation on TikTok to Trump this week: Mnuchin

WASHINGTON (Reuters) – U.S. Treasury Secretary Steve Mnuchin said on Wednesday that popular Chinese-owned video-sharing app TikTok was under a national security review and that his agency would make a recommendation to the president on the app this week.

The Committee on Foreign Investment in the United States (CFIUS), which reviews deals by foreign acquirers for potential national security risks and is led by Treasury, is looking at TikTok, Mnuchin told reporters at the White House.

The committee has the power to force companies to unwind deals or put in place measures to protect U.S. national security.

“TikTok is under CFIUS review. We will be making a recommendation to the president this week so we have lots of alternatives,” he said.

TikTok did not immediately respond to a request for comment.

Flanked by Mnuchin, Trump said before leaving the White House on a trip to Texas that “we are thinking about making a decision” about the company, owned by China’s Beijing Bytedance.

(Reporting by Alexandra Alper; Writing by Doina Chiacu; Editing by Chris Reese and Bernadette Baum)

Senate committee to vote on bill banning federal employees from using TikTok

By Nandita Bose

WASHINGTON (Reuters) – A U.S. Senate committee is likely to vote next week on a bill from Republican Senator Josh Hawley that would ban federal employees from using social media app TikTok on government-issued devices.

The Senate Homeland Security and Governmental Affairs Committee will take up the “No TikTok on Government Devices Act” at its hearing on July 22.

TikTok’s Chinese ownership and wide popularity among American teens have brought scrutiny from U.S. regulators and lawmakers.

TikTok, owned by China’s ByteDance, is known for its ability to create short videos. The company last year said that about 60% of its 26.5 million monthly active users in the U.S. are aged 16 to 24.

One of the company’s harshest critic, Hawley has repeatedly raised national security concerns over TikTok’s handling of user data and said he was worried that the company shares data with the Chinese government.

“For federal employees it really is a no-brainer. It’s a major security risk. … Do we really want Beijing having geo-location data of all federal employees? Do we really want them having their keystrokes?” Hawley told reporters in March when he announced the introduction of the bill.

Several U.S. agencies that deal with national security and intelligence issues have banned employees from using the app, which allows users to create short videos.

Recently, Secretary of State Mike Pompeo said the United States is looking at banning Chinese social media apps, including TikTok, suggesting it shared information with the Chinese government. He said Americans should be cautious in using the app.

TikTok in the past has told Reuters it has never provided user data to China. It did not immediately respond to a request for comment.

Under a law introduced in 2017 under Chinese President Xi Jinping, Chinese companies have an obligation to support and cooperate in China’s national intelligence work.

(Reporting by Nandita Bose in Washington; Editing by Leslie Adler)

U.S. will act to deny China access to Americans’ data, says Pompeo

By Humeyra Pamuk

WASHINGTON (Reuters) – The Trump administration will take steps to ensure the Chinese government does not gain any access to the private information of American citizens through telecommunications and social media, U.S. Secretary of State Mike Pompeo said on Wednesday, when asked if the U.S. was planning to ban Chinese-owned app Tiktok.

Pompeo also praised U.S. technology giants Google, Twitter Inc and Facebook Inc for ‘refusing to surrender’ user data to the Hong Kong government and urged other companies to follow suit, after China’s establishment of a sweeping new national security law for the semi-autonomous city.

Speaking two days after he said Washington was “certainly looking at” banning Chinese social media apps, including TikTok, Pompeo said the U.S. evaluation was not focused on a particular company but that it was a matter of national security.

“The comments that I made about a particular company earlier this week fall in the context of us evaluating the threat from the Chinese Communist Party,” Pompeo said. He added that Washington was working to ensure that Beijing does not gain access to any private data or health records of Americans.

“So what you’ll see the administration do is take actions that preserve and protect that information and deny the Chinese Communist Party access to private information that belongs to Americans,” he said.

U.S. lawmakers have raised national security concerns over TikTok’s handling of user data, saying they were worried about Chinese laws requiring domestic companies “to support and cooperate with intelligence work controlled by the Chinese Communist Party.”

On Monday, Tiktok told Reuters it has never provided user data to China. The app, which is not available in China, has sought to distance itself from its Chinese roots to appeal to a global audience.

Pompeo’s remarks also come amid increasing U.S.-China tensions over the handling of the coronavirus outbreak, China’s actions in the former British colony of Hong Kong and a nearly two-year trade dispute between the U.S. and China.

Pompeo reiterated the need for allies and the international community to help shape the global telecoms infrastructure free of the Chinese government’s influence.

“The infrastructure of this next hundred years must be a communications infrastructure that is based on a Western ideal,” he said.

(Reporting by Humeyra Pamuk, Susan Heavey and Daphne Psaledakis; Editing by Bernadette Baum)

Exclusive: U.S. opens national security investigation into TikTok – sources

Exclusive: U.S. opens national security investigation into TikTok – sources
By Greg Roumeliotis, Yingzhi Yang, Echo Wang and Alexandra Alper

NEW YORK/BEIJING/WASHINGTON (Reuters) – The U.S. government has launched a national security review of TikTok owner Beijing ByteDance Technology Co’s $1 billion acquisition of U.S. social media app Musical.ly, according to two people familiar with the matter.

While the $1 billion acquisition was completed two years ago, U.S. lawmakers have been calling in recent weeks for a national security probe into TikTok, concerned the Chinese company may be censoring politically sensitive content, and raising questions about how it stores personal data.

TikTok has been growing more popular among U.S. teenagers at a time of growing tensions between the United States and China over trade and technology transfers. About 60% of TikTok’s 26.5 million monthly active users in the United States are between the ages of 16 and 24, the company said earlier this year.

The Committee on Foreign Investment in the United States (CFIUS), which reviews deals by foreign acquirers for potential national security risks, has started to review the Musical.ly deal, the sources said. TikTok did not seek clearance from CFIUS when it acquired Musical.ly, they added, which gives the U.S. security panel scope to investigate it now.

CFIUS is in talks with TikTok about measures it could take to avoid divesting the Musical.ly assets it acquired, the sources said. Details of those talks, referred to by CFIUS as mitigation, could not be learned. The specific concerns that CFIUS has could also not be learned.

The sources requested anonymity because CFIUS reviews are confidential.

“While we cannot comment on ongoing regulatory processes, TikTok has made clear that we have no higher priority than earning the trust of users and regulators in the U.S. Part of that effort includes working with Congress and we are committed to doing so,” a TikTok spokesperson said. ByteDance did not immediately reply to a request for comment.

The U.S. Treasury Department, which chairs CFIUS, did not immediately respond to a request for comment.

Last week, U.S. Senate Minority Leader Chuck Schumer and Senator Tom Cotton asked for a national security probe. They said they were concerned about the video-sharing platform’s collection of user data, and whether China censors content seen by U.S. users. They also suggested TikTok could be targeted by foreign influence campaigns.

“With over 110 million downloads in the U.S. alone, TikTok is a potential counterintelligence threat we cannot ignore,” Schumer and Cotton wrote to Joseph Macguire, acting director of national intelligence.

TikTok allows users to create and share short videos with special effects. The company has said U.S. user data is stored in the United States, but the senators noted that ByteDance is governed by Chinese laws.

TikTok also says China does not have jurisdiction over content of the app, which does not operate in China and is not influenced by any foreign government.

Last month, Musical.ly founder Alex Zhu, who heads the TikTok team, started to report directly to ByteDance CEO Zhang Yiming, one of the sources said. He previously reported to Zhang Nan, the head of ByteDance’s Douyin, a Chinese short video app. It was not clear whether this move, which separates TikTok organizationally from ByteDance’s other holdings, was related to the company’s discussions with CFIUS over mitigation.

In October, U.S. senator Marco Rubio asked CFIUS to review ByteDance’s acquisition of Musical.ly. He cited questions about why TikTok had “only had a few videos of the Hong Kong protests that have been dominating international headlines for months.”

Facebook CEO Mark Zuckerberg, whose product competes with TikTok particularly for younger users, has also criticized the app over censorship concerns.

The United States has been increasingly scrutinizing app developers over the safety of personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

Chinese gaming company Beijing Kunlun Tech Co Ltd said in May it would seek to sell its popular gay dating app Grindr after it was approached by CFIUS with national security concerns.

Last year, CFIUS forced China’s Ant Financial to scrap plans to buy MoneyGram International Inc over concerns about the safety of data that could be used to identify U.S. citizens.

The panel also compelled Oceanwide Holdings and Genworth Financial Inc to work through a U.S. third party data administrator to ensure the Chinese company could not access the insurer’s U.S. customers’ personal private data.

BYTEDANCE’S RISE

ByteDance is one of China’s fastest growing startups. It owns the country’s leading news aggregator, Jinri Toutiao, as well as TikTok, which has attracted celebrities like Ariana Grande and Katy Perry.

ByteDance counts Japanese technology giant SoftBank, venture firm Sequoia Capital and big private-equity firms such as KKR, General Atlantic and Hillhouse Capital Group as backers.

Analysts have called ByteDance a strong threat to other Chinese tech industry firms including social media and gaming giant Tencent Holdings Ltd and search engine leader Baidu Inc. Globally, ByteDance’s apps have 1.5 billion monthly active users and 700 million daily active users, the company said in July.

The seven-year-old Chinese start-up posted a better-than-expected revenue for the first half of 2019 at over $7 billion, and was valued at $78 billion late last year, sources have told Reuters.

(Reporting by Greg Roumeliotis and Echo Wang in New York, Yingzhi Yang in Beijing and Alexandra Alper in Washington, D.C.; Editing by David Gregorio)