US Regulator Warns About Data Security During TikTok Hearing

(Bloomberg) -- Data security is a top concern for a secretive US panel of regulators with the power to block foreign transactions, a Treasury Department spokesperson said in a statement as House lawmakers grilled TikTok Inc.’s chief executive Thursday.

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The Committee on Foreign Investment in the US seldom issues public remarks on its work, making the Treasury spokesperson’s statement unusual. It was issued in the middle of a House hearing on TikTok, though it didn’t mention the company by name.

“As a general matter, CFIUS does not comment on transactions,” the statement began. “In every case the committee reviews, however, CFIUS takes all necessary actions within its authority to safeguard national security and will not clear any transaction unless it determines there are no unresolved national security concerns.”

TikTok’s handling of its millions of American users’ data is a central focus of the House hearing, with lawmakers of both parties expressing concern that the Chinese government may have access to the data via TikTok’s parent company, China-based ByteDance Ltd.

The Treasury statement continued: “Broadly speaking, some transactions can present data security risks — including providing a foreign person or government with access to troves of Americans’ sensitive personal data as well as access to intellectual property, source code, or other potentially sensitive information.”

TikTok’s chief executive officer, Shou Chew, told the House Energy and Commerce Committee that Americans’ user data is stored on US soil, but he did not explicitly say that ByteDance executives or Chinese government officials are unable to access the information.

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“CFIUS, on a case-by-case basis, will ensure the protection of national security, including to prevent the misuse of data through espionage, tracking, and other means that threaten national security,” the Treasury statement concluded.

CFIUS rarely, if ever, comments on transactions it’s reviewing. The law that created the body, which includes agencies from across the federal government, provides criminal penalties for anyone who leaks information about deals that can involve billions of dollars. It’s not uncommon in Washington for officials to raise concerns about going to prison if they talk about their work on CFIUS.

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