Daily Management Review

TikTok Has Put A Halt To Consultant Hiring For The US Security Deal As Opposition Grows


TikTok has halted a search for consultants to assist it in implementing a potential security agreement with the United States, according to two people familiar with the matter, as opposition to such a deal grows among US officials.
For the past three years, the short-video app, owned by Chinese technology conglomerate ByteDance, has sought to reassure Washington that personal data of US citizens cannot be accessed and its content cannot be manipulated by China's Communist Party or any other entity under Beijing's influence.
President Joe Biden revoked his predecessor Donald Trump's executive order to ban TikTok in the United States in 2021, but talks between his administration and the social media company have continued over a potential deal that would prevent ByteDance from being forced to divest TikTok.
TikTok has been working on a program to reassure the US government that it will follow through on their security agreement.
According to two people familiar with the matter, the program entails hiring a third-party monitor, a source-code inspector, and three auditors, including one dedicated to cyber security and one to ensure that U.S. user data on existing TikTok servers is deleted following the migration to Oracle Corp.
TikTok would pay for these positions, but they would report to US government officials.
TikTok issued requests for proposals for some of these positions in early December, with the intention of submitting potential candidates for approval to the Committee on Foreign Investment in the United States (CFIUS), the security panel that has been investigating ByteDance's ownership of the popular app.
According to the sources, TikTok informed the consultants vying for one of the roles late last month that the hiring process was on hold and that it would update them by the end of January on whether it would restart.
According to one of the sources, TikTok cited "recent developments" in its explanation to consultants without elaborating.
TikTok's hiring freeze came after the company 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 information leaks to the media.
According to people familiar with the discussions, this unsettled some US officials who were supportive of a security deal with TikTok and strengthened the hand of China hawks in the US government calling for Biden to order ByteDance to divest the app.
It is unclear when the United States government will make a decision on TikTok's future.
TikTok confirmed that it had paused the hiring process for third-party security vendors because CFIUS had not yet approved the security agreement. TikTok had hoped to have reached an agreement by now, she added.
TikTok was also hiring "rapidly" for data security roles that did not require security approval, according to the spokeswoman.
"While some components of our plan are specific to US government oversight, we are continuing to move forward on security measures overall," the spokeswoman said.
The Treasury Department, which chairs CFIUS, and the White House did not respond to a request for comment right away.
TikTok has already announced a number of measures aimed at appeasing the US government, including an agreement with Oracle to store user data in the US and the establishment of a US security division (USDS) to oversee data protection and content moderation. To build that unit, it has spent $1.5 billion on hiring and reorganization.
The USDS division's headcount is expected to more than double to 2,500 for roles such as engineering, security, and trust and safety, according to a spokeswoman.
TikTok's misuse of journalists' data, according to Chris Griner, a Stroock & Stroock & Lavan LLP security lawyer who is not involved in the TikTok negotiations, undermined previous assurances to protect user information.
"We have done many reviews before CFIUS over decades – and trust is a critical component in successful reviews," Griner told Reuters. "Once gone, it is exceedingly hard to get it back."
US lawmakers seeking to impose sanctions on China as part of a broader set of disputes over trade, intellectual property, and human rights have used TikTok security concerns to put pressure on the White House to take a tough stance.
Last month, Biden signed a spending bill into law prohibiting federal employees (roughly 4 million) from using TikTok on government-issued devices, following similar bans enacted by some states and local governments.
TikTok CEO Shou Zi Chew will meet with European Union antitrust chief Margrethe Vestager next week in Brussels to discuss issues such as online platform data protection and the implementation of the EU's Digital Services Act.