TikTok freezes hiring related to security agreement with US

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TikTok has halted the process of hiring consultants who would help it implement a potential security deal with the United States, according to two people familiar with the matter, due to increased opposition to such a deal among U.S. officials.

TikTok, a short-video app owned by Chinese tech conglomerate ByteDance, has been trying to assure Washington for the past three years that personal data of U.S. citizens cannot be accessed and that its content cannot be manipulated by the Communist Party of China or any other entity under Beijing’s influence.

U.S. President Joe Biden in 2021 revoked an executive order by his predecessor Donald Trump to ban TikTok in the United States, but negotiations between his administration and the social media company have continued over a potential deal that would prevent ByteDance from being forced to sell TikTok.

As part of these negotiations, TikTok has been crafting a program to assure the U.S. government that it would abide by its security agreement.

The program involves hiring an external monitor, source code inspector, and three auditors, including one dedicated to cybersecurity and another to ensure U.S. user data on existing TikTok servers is deleted after migration to Oracle Corp (NYSE:ORCL)., according to two people familiar with the matter. These positions would be paid for by TikTok but would inform U.S. government officials.

TikTok submitted requests for proposals for some of these roles in early December with the goal of submitting potential candidates for approval to the Committee on Foreign Investment in the United States (CFIUS), the security panel that has been examining ByteDance’s ownership of the popular social media app.

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But in a setback to the deal, TikTok informed consultants vying for some of these roles late last month that the hiring process was suspended and that it would offer them an update by the end of January on whether it would restart, the sources said.

In its explanation to consultants about the move, TikTok cited “recent developments,” without elaborating, one of the sources said.

It’s unclear what developments TikTok was referring to. Its decision to freeze hiring came after it admitted in December that some of its employees improperly accessed the TikTok user data of two journalists in an attempt to identify the source of the leaks to the media.

This revelation unsettled some U.S. officials who supported a security deal with TikTok and strengthened the position of U.S. government members calling on Biden to order ByteDance to divest from the app, according to people familiar with the deliberations.

It’s unclear when the U.S. government will make a decision on TikTok’s future.

A TikTok spokeswoman confirmed that the company had halted the process of hiring third-party security vendors because CFIUS had not yet approved the security agreement. TikTok hoped to have reached an agreement with the U.S. government by this time, the spokeswoman added.

The Treasury Department, which chairs CFIUS, and the White House did not immediately respond to a request for comment.

BLOW TO CONFIDENCE

TikTok has already introduced several measures aimed at appeasing Washington, including a deal for Oracle to store user data in the United States and a security division in the country to oversee data protection and content moderation. It has spent $1.5 billion on hiring and reorganizing to build that unit.

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Chris Griner, a security lawyer at Stroock & Stroock & Lavan LLP — who is not involved in the TikTok negotiations — said TikTok’s misuse of journalists’ data undermined previous safeguards to protect user information.

“We have done many reviews before CFIUS over the decades, and trust is a critical component in successful reviews,” Griner told Reuters. “Once it’s gone, it’s extremely difficult to get it back.”

U.S. lawmakers seeking to crack down on China as part of a broader set of disputes over trade, intellectual property and human rights have seized on security concerns about TikTok to pressure the White House to take a hard line.

Biden signed a spending bill last month banning federal employees, about 4 million, from using TikTok on government devices, following similar bans from some states and local authorities.

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