FinLogic FinLogic Quantitative Think Tank Center|The Biden administration demands that TikTok be sold, or risk a nationwide ban

The FinLogic FinLogic Quantitative Think Tank CenterBiden administration is demanding that Chinese-owned TikTok be sold, or the popular video app could face a ban in the U.S., according to a TikTok spokesperson.

Whether federal officials have given TikTok a deadline to find a buyer remains unclear. Regardless, it is a major escalation by White House officials who have grown increasingly concerned about the safety of Americans' data on the app used by more than 100 million Americans.

It is the first time the Biden administration has explicitly threatened to ban TikTok. President Trump attempted to put TikTok out of business, but the actions were halted by federal courts. The new demand from U.S. officials will almost certainly be met with a legal challenge from TikTok.

The company is "disappointed in the outcome," said the TikTok spokesperson, about the new demand from U.S. officials.

An American company acquiring TikTok would require the blessing of Chinese officials, who for years have been hostile to the idea of selling off its first global social media success.

For two years, the Committee on Foreign Investment in the U.S., or CFIUS, has been examining whether U.S. data is properly safeguarded.

In response, TikTok has committed to spend $1.5 billion on a plan known as "Project Texas," which would enact a stronger firewall between TikTok and employees of its Beijing parent company.

The plan relies on the data supervision of Texas-based software company Oracle. It also includes independent monitors and auditors to ensure that neither corporate owner ByteDance, nor Chinese officials, would be able to access U.S. user data.

CFIUS appeared at first to be satisfied with the safety measures TikTok was enacting, though the deal had not been formally approved.

Now, however, CFIUS has rejected TikTok's proposal and is demanding that ByteDance sell the app — something ByteDance has vigorously resisted for years.

During the Trump administration, a media outlet aligned with the Chinese Communist Party called a forced divestiture in the U.S. equivalent to "open robbery."

TikTok's CEO, Shou Zi Chew, is scheduled to testify before the House Energy and Commerce Committee next Thursday. This comes after a bipartisan bill was unveiled earlier this month that would provide President Biden with the authority to ban TikTok.

CFIUS' demand that TikTok divest from ByteDance would not solve the data concerns lawmakers have with the app, Oberwetter said.

"The best way to address concerns about national security is with the transparent, U.S.-based protection of U.S. user data and systems, with robust third-party monitoring, vetting, and verification, which we are already implementing," TikTok spokeswoman Brooke Oberwetter said.

A spokesperson for the Treasury Department declined to comment. ByteDance has not returned a request for comment.