Paul Marquardt is partner at Cleary Gottlieb Steen & Hamilton LLP. This post is based on his Cleary memorandum.
Initial press reports last November that the Committee on Foreign Investment in the United States (CFIUS) had commenced a review of ByteDance’s acquisition of Musical.ly, the service that was merged into ByteDance’s video-sharing site TikTok and helped fuel its expansion, were not particularly surprising to those familiar with CFIUS and its concerns. However, recent departures from established CFIUS processes in the TikTok matter are striking and concerning for persons engaging in cross-border transactions involving the United States, calling into question the scope, apolitical nature, confidentiality, and security focus of the CFIUS process.
CFIUS’s concerns regarding the protection of personal information of U.S. citizens stretch back to the Obama Administration, and while TikTok may not appear to be a particularly sensitive platform, it has had significant privacy issues in the past, including well-publicized security concerns, allegations of censorship, and an FTC fine for illegally collecting the personal information of children. It is not particularly surprising that these concerns would attract CFIUS review.
