The chairman of the House select committee on China said a recent change in Commerce Department regulations appears to be aimed at allowing the Chinese-owned social media app TikTok to continue operating in the United States, despite congressional fears that Beijing could use the online service as a tool of espionage or propaganda.
In a Friday letter to Commerce Secretary Gina Raimondo, Rep. Mike Gallagher (R-Wis.), the panel’s chairman, accused the department of watering down proposed rules on supply chain security so that the Biden administration can more easily approve TikTok’s proposal to calm U.S. national security concerns through a corporate restructuring.
A Commerce spokesperson said the department had received the letter and would respond “via appropriate channels.”
Tik Tok’s planned makeover — known as “Project Texas” — is designed to address Washington’s security fears by removing its U.S. business from the control of ByteDance, the company’s Chinese owner. Under the plan, all U.S. user data would be stored on servers based in the United States under the control of software giant Oracle and would be off limits to the company’s China-based executives.
Oracle specialists also would be responsible for reviewing TikTok’s software code and the algorithm that determines which videos are recommended for the company’s more than 100 million American users. Considered the world’s most popular app, TikTok claims 150 million monthly active users in the United States. Two-thirds of American teens say they use the app, according to a Pew Research Center survey.
“The national-security threat posed by TikTok cannot be mitigated, and we urge you to abandon any course of action that stops short of fully addressing that threat,” Gallagher in a letter also signed by Sen. Marco Rubio (R-Fla.), the vice chairman of the Senate Intelligence Committee.
Starting with the Trump administration, U.S. policymakers have taken aim at TikTok as a potential weapon of Chinese spying or influence. But finding an effective response has not been easy.
A federal judge in 2020 blocked President Donald Trump’s effort to ban the short-video service. Likewise, the Biden administration has struggled to address any potential national security issues associated with TikTok without incurring the political costs involved in restricting a social media service that is hugely popular with young Americans, as the president prepares for reelection.
For most of the past year, the interagency Committee on Foreign Investment in the United States has been reviewing the company’s proposed “mitigation agreement,” which would place TikTok’s U.S. operations under a three-person board of directors, composed of American executives subject to U.S. government approval.
Lawmakers from both parties greeted that plan with skepticism. But the recent revisions to the Commerce regulations may indicate that the administration is warming to Project Texas, said Paul Triolo, senior vice president at the Albright Stonebridge Group.
“There’s just no easy solution to this,” he said. “My gut feeling is that people have decided that Project Texas is more than just a sham. It’s a serious effort.”
Gallagher’s letter followed Commerce’s June 16 issuance of a final supply chain security rule for certain “connected software applications” owned or controlled by foreign adversaries. TikTok is the most prominent example of such an application, a subset of a broader product category known as information and communications technology and services (ICTS).
The department began its rulemaking process in November 2021 by issuing a proposed rule. After reviewing public comments, Commerce officials revised the wording of one sentence in the draft in a way that aroused the suspicions of Gallagher and Rubio.
The final version calls for the secretary to review specific ICTS transactions to see whether any risks can be “mitigated” rather than “addressed,” as specified in the proposed rule. And it calls for such changes to be “verified by independent third parties” rather than “by independently verifiable measures.”
In his letter to Raimondo, Gallagher calls the change in verbs “alarming,” since the reference to mitigation suggests a response to Tik Tok that would fall short of the outright ban or sale to a U.S. owner that he favors. And he said the second language change likewise appears designed to greenlight what he calls TikTok’s “sham mitigation proposal.”
Gallagher demanded that Commerce produce “all communications” regarding the decision to rewrite the proposed rule by June 30. He also sought any Commerce communications with representatives of TikTok or ByteDance, other federal agencies or other companies about using the regulations to impose restrictions on the popular social media app.