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Exclusive: TikTok parent tries to wall off app amid U.S. probe - sources

The social media app TikTok, widely popular with American teenagers, has at least one thing that separates it from others such as Facebook, Twitter, or Snapchat.

It's not based Silicon Valley, but in fact owned by a Chinese technology company called ByteDance.

And Reuters has learned exclusively that ByteDance is now trying to separate TikTok out from its Chinese operations as U.S. regulators scrutinize the parent company over how it stores personal data.

TikTok was once an app known as Musical.ly, which featured teens lip-synching to their favorite tunes.

It was bought for $1 billion by ByteDance. Reuters reported earlier this month that acquisition fell under the eye of the Committee on Foreign Investment in the United States, or CFIUS, which reviews deals by foreign companies that could pose national security risks. CFIUS wants to know that U.S. user data will be stored in the in United States and not compromised by Chinese authorities.

ByteDance wants to avoid what happened to Chinese gaming firm Beijing Kunlun Tech Co, which agreed last spring to divest from its purchase of the gay hookup app Grindr over data concerns. U.S. lawmakers called last month for a national security probe into TikTok, expressing concern that the Chinese company may be censoring politically sensitive content, and raising questions about how it stores personal data.

Last week, U.S. Army Secretary Ryan McCarthy said the U.S. military is undertaking a security assessment of TikTok. Facebook CEO Mark Zuckerberg, whose social media platform competes with TikTok for younger users, has also criticized the app over censorship concerns.

Sources told Reuters ByteDance had already started to separate its TikTok operations over the summer, before CFIUS got involved. The company says user data is stored in the U.S., with a backup in Singapore. Sources also said the TikTok is trying to set up a team in Mountain View, California, to oversee data management. It's not clear if these changes will soothe CFIUS's concerns.

A Treasury Department spokeswoman would not comment on specific CFIUS cases.

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