The renewed effort in Congress to force Chinese-owned ByteDance to divest from TikTok has sparked questions over how the two foreign companies are structured.
Opponents of the divestiture legislation (H.R.7521) — sponsored by Rep. Mike Gallagher (R-WI) — are pushing two talking points regarding TikTok and ByteDance’s corporate governance. The first is that both TikTok and ByteDance are incorporated in the Cayman Islands and are thus not Chinese companies nor subject to the Communist state’s 2017 National Intelligence Law. The second talking point is that ByteDance, TikTok’s parent company, only has 20 percent ownership by Chinese founders and investors, while employees own an additional 20 percent, and global investors make up 60 percent of the ownership.
On paper, both points appear to ring true to the casual observer; the nature of China’s regulatory and socio-political structures obfuscates the extent to which ByteDance and, in conjunction, TikTok are controlled by the Chinese Communist Party (CCP) and military.