Biden Team Beefs Up Security Reviews of Foreign Investments By Bloomberg

(Bloomberg) — The Biden administration will intensify national security reviews of foreign investments in the US by adding criteria for regulators to scrutinize in deals, including potential risks to sensitive data, senior administration officials said.

An executive order that President Joe Biden plans to sign Thursday will add five new factors for reviews of transactions by the Committee on Foreign Investment in the United States, or CFIUS, an interagency panel that reviews acquisitions of US businesses by foreign buyers.

The new criteria include a deal’s impact on the resilience of critical supply chains, risks to sensitive data of US citizens, cybersecurity threats, as well as the effect on national security and US technological leadership, according to a White House fact sheet.

The new criteria will apply to sectors including semiconductors, artificial intelligence, biotechnology and clean energy technologies. The move reflects growing concern in the White House and among both Democrats and Republicans about China, in particular, which seeks to rapidly match and eventually surpass the US in a variety of high-tech industries, including through investments in American companies.

The officials spoke on condition of anonymity to preview the order in a call with reporters.

TikTok Review Unresolved

One high-profile case involving Americans’ data that continues to be unresolved is a national security review of TikTok Inc., which is owned by Chinese company ByteDance Inc.

The review, which started in 2019 under former President Donald Trump, stems from ByteDance’s 2017 purchase of Musical.ly, an app that did business in the U.S and was later folded into TikTok. 

The administration is working to resolve concerns about Chinese government access to US user data that have fueled the years-long review of the popular video-sharing app. 

Previous reviews of certain transactions have brought out some of the concerns targeted in the order, one of the officials said in response to a question on what prompted the new criteria.

In addition to more closely scrutinizing inbound investments, the Biden administration also continues to examine potential limits on certain US investments in rival countries like China. 

White House officials have signaled that any restrictions would likely be narrow and would not occur without giving affected industries sufficient time to comment. That process is ongoing and not related to Thursday’s order, one official said.

While Biden’s order, as well as CFIUS reviews in general, isn’t country-specific, a significant number of transactions reviewed by the committee have involved Chinese buyers.

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