Congress Struggles to Grasp the TikTok Deal's Compliance with Its Own Law The ongoing saga surrounding TikTok's future in the United States has taken another twist, as the company announced a new structure meant to bring it into compliance with a law that should have already banned the popular social media app. However, the lawmakers who passed that law still seem uncertain about whether the latest deal truly satisfies its requirements. The origins of this convoluted situation date back to 2020, when the Trump administration issued an executive order that effectively banned TikTok in the US, citing national security concerns over the app's Chinese ownership. In response, TikTok's parent company ByteDance scrambled to find a way to salvage its American operations, ultimately striking a deal that would see Oracle and Walmart take a stake in a new US-based TikTok entity. This arrangement was meant to address the administration's concerns by reducing ByteDance's control and giving American companies a larger role. However, the deal languished in regulatory limbo, and the Biden administration ultimately revoked Trump's TikTok ban last year, leaving the company's status in legal uncertainty. Enter the "CFIUS law," formally known as the Foreign Investment Risk Review Modernization Act (FIRRMA). Passed in 2018, this legislation gave the Committee on Foreign Investment in the United States (CFIUS) expanded powers to review and potentially block foreign investments in US companies on national security grounds. It was this law that the Trump administration cited as the legal basis for its TikTok ban. And now, over a year after that order was issued, TikTok has announced a new corporate structure that it claims brings the company into compliance with FIRRMA. The key elements of this new arrangement are: - TikTok's US operations have been spun off into a separate entity called TikTok USDS Joint Venture LLC. - ByteDance, TikTok's Chinese parent company, now holds only a 19.9% stake in this new US-based joint venture. - The remaining ownership is split between Oracle (40%), investment firms Silver Lake and Panorama (together holding 40%), and a handful of smaller investors including Michael Dell's family office. - Oracle will be responsible for storing and managing the data of TikTok's US users. In announcing the deal, TikTok emphasized that this new structure "significantly reduces" ByteDance's control and ownership of the US operations, positioning it as a meaningful step towards addressing the national security concerns that initially prompted the Trump administration's efforts to ban the app. However, the lawmakers who originally passed the FIRRMA law still seem unsure whether this latest TikTok arrangement truly complies with its requirements. In a hearing on Wednesday, members of the Senate Banking Committee grilled administration officials about the deal, with several expressing skepticism that it adequately addresses the risks posed by ByteDance's continued involvement. "I'm not confident that this deal, as it's currently structured, actually complies with the law that we passed," said Senator Pat Toomey, the ranking Republican on the committee. The key sticking point appears to be the extent of ByteDance's ongoing influence over TikTok's US operations, despite the reduced ownership stake. Senators questioned whether the Chinese parent company would still wield significant control through its minority shareholding, board representation, and other contractual arrangements. "I don't think the statute allows for a situation where a foreign adversary maintains a significant ownership interest," argued Senator Mark Warner, the committee's Democratic chairman. Administration officials, for their part, maintained that the deal does meet the legal requirements, with a Treasury Department representative stating that CFIUS had "carefully reviewed" the arrangement. However, they acknowledged that the committee is still "monitoring the implementation" of the agreement to ensure it continues to comply. The lack of clarity from lawmakers is emblematic of the broader confusion and uncertainty surrounding TikTok's status in the US. Despite the company's efforts to appease regulators, there remains a fundamental disconnect between TikTok's corporate restructuring and the original intent of the FIRRMA law – to fully insulate American technology and data from foreign influence. This uncertainty is particularly concerning given the ongoing geopolitical tensions between the US and China. TikTok's ties to ByteDance, a Chinese company, have long been a source of bipartisan concern in Washington, with fears that the app could be used by the Chinese government to gather intelligence or spread disinformation. The Biden administration has signaled that it views TikTok as a potential national security threat, with officials reportedly considering a nationwide ban on the app if a satisfactory deal cannot be reached. And while the current TikTok arrangement may have addressed some of the immediate legal issues, it remains to be seen whether it will ultimately pass muster with CFIUS and allay the broader concerns of lawmakers. As the debate over TikTok's future in the US continues, the lack of clarity from Congress highlights the challenges of crafting effective policies to address the complex national security risks posed by the global digital economy. The TikTok saga serves as a cautionary tale, underscoring the need for policymakers to stay vigilant and continuously adapt their approaches to rapidly evolving technological and geopolitical landscapes.