ACES Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 3057 To require ByteDance to divest itself of certain assets, and to require the Committee on Foreign Investment in the United States to review certain business relationships between ByteDance and United States businesses, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 7, 2021 Mrs. MCCLAIN (for herself, Mr. BANKS, Mr. WILSON of South Carolina, Ms. HERRELL, Mr. NORMAN, Mr. VAN DREW, Mr. GOODEN of Texas, Mr. STEUBE, and Mrs. CAMMACK) introduced the following bill; which was re- ferred to the Committee on Financial Services, and in addition to the Committees on Foreign Affairs, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consider- ation of such provisions as fall within the jurisdiction of the committee concerned A BILL To require ByteDance to divest itself of certain assets, and to require the Committee on Foreign Investment in the United States to review certain business relationships between ByteDance and United States businesses, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3057 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Anti-CCP Espionage 2 via Social Media Act of 2021’’ or the ‘‘ACES Act of 3 2021’’. 4 SEC. 2. FINDINGS. 5 Congress makes the following findings: 6 (1) TikTok engages in political censorship, in- 7 cluding related to awareness of Uighur Muslim in- 8 ternment camps in China. 9 (2) The U.S. government fined TikTok $5.7 10 million for illegally collecting children’s data. 11 (3) TikTok’s Chinese parent company 12 ByteDance has agreed to pay $92 million in a settle- 13 ment to U.S. users who are part of a class-action 14 lawsuit alleging that the video-sharing app failed to 15 get their consent to collect data in violation of a 16 strict Illinois biometric privacy law. 17 (4) Chinese companies, such as TikTok, have 18 no meaningful ability to tell the Chinese Communist 19 Party ‘‘no’’ if officials request user data. 20 (5) The presence of Chinese surveillance in ap- 21 plications such as TikTok raises U.S. national secu- 22 rity concerns. 23 SEC. 3. STATEMENT OF POLICY. 24 It is the policy of the United States to secure the 25 information and communications technology and services 26 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3057 IH supply chain and to counter the threat posed by mobile 1 applications and software services developed and owned by 2 foreign adversaries, specifically the People’s Republic of 3 China and the Chinese Communist Party, which continue 4 to threaten the national security, foreign policy, and econ- 5 omy of the United States. 6 SEC. 4. CODIFICATION OF THE EXECUTIVE ORDER AD- 7 DRESSING THE THREAT POSED BY TIKTOK. 8 (a) Executive Order 13942 of August 6, 2020 as in 9 effect as of January 19, 2021, shall remain in effect and 10 continue to apply. 11 (b) Notwithstanding section 203(b) of the Inter- 12 national Emergency Economic Powers Act, the President 13 shall have the authority to implement Executive Order 14 13942. 15 SEC. 5. DIVESTMENT OF ASSETS BY BYTEDANCE. 16 (a) IN GENERAL.—ByteDance shall divest itself of— 17 (1) any tangible or intangible assets or prop- 18 erty, wherever located, used to enable or support 19 ByteDance’s operation of the TikTok application in 20 the United States, as determined by CFIUS; and 21 (2) any data obtained or derived from TikTok 22 application or Musical.ly application users in the 23 United States. 24 (b) DEADLINE.— 25 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3057 IH (1) IN GENERAL.—Subject to paragraph (2), 1 ByteDance shall complete the divestment of assets 2 required under subsection (a) before the end of the 3 90-day period beginning on the date of enactment of 4 this Act. 5 (2) EXTENSIONS.—CFIUS may provide one or 6 more 30-day extensions with respect to the deadline 7 described under paragraph (1), but under no cir- 8 cumstances may such extensions extend the deadline 9 beyond the end of the 12-month period beginning on 10 the date of enactment of this Act. 11 (3) PROGRESS REPORT.—Not later than the 12 end of the 45-day period beginning on the date of 13 enactment of this Act, ByteDance shall provide evi- 14 dence to the President that ByteDance is in the 15 process of divesting itself of all assets described 16 under subsection (a). 17 (c) CERTIFICATIONS AND AUDITS.— 18 (1) WEEKLY CERTIFICATION.—Until 19 ByteDance provides the certification under para- 20 graph (2)(A), ByteDance and TikTok shall certify to 21 CFIUS on a weekly basis that they are in compli- 22 ance with this Act and ByteDance shall include a 23 description of efforts to make divestment required 24 under this section and a timeline for projected com- 25 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3057 IH pletion of remaining actions necessary to complete 1 such divestment. 2 (2) DATA DESTRUCTION CERTIFICATION AND 3 AUDIT.—After the deadline described under sub- 4 section (b)(1)— 5 (A) ByteDance shall certify in writing to 6 CFIUS that ByteDance has destroyed all data 7 that ByteDance is required to divest pursuant 8 to this section, including all copies of such data 9 wherever located; and 10 (B) CFIUS may audit ByteDance, on such 11 terms as CFIUS determines appropriate, in 12 order to ensure that such destruction of data is 13 complete. 14 (d) LIMITATION ON DIVESTMENTS.— 15 (1) IN GENERAL.—In carrying out a divestment 16 required under this section, ByteDance may not 17 complete a sale or transfer to any third party— 18 (A) until ByteDance notifies CFIUS in 19 writing of the intended recipient or buyer; and 20 (B) unless 10 business days have passed 21 from such notification and CFIUS has not 22 issued an objection to ByteDance. 23 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3057 IH (2) CFIUS CONSIDERATIONS.—Among the fac- 1 tors CFIUS may consider in reviewing a proposed 2 sale or transfer described under paragraph (1) are— 3 (A) whether the buyer or transferee— 4 (i) is a U.S. citizen or is owned by 5 U.S. citizens; 6 (ii) has or has had a direct or indirect 7 contractual, financial, familial, employ- 8 ment, or other close and continuous rela- 9 tionship with ByteDance, or its officers, 10 employees, or shareholders; and 11 (iii) can demonstrate a willingness 12 and ability to support compliance with this 13 Act; and 14 (B) whether the proposed sale or transfer 15 would threaten to impair the national security 16 of the United States or undermine the purpose 17 of this Act, and whether the sale effectuates, to 18 CFIUS’s satisfaction and in CFIUS’s discre- 19 tion, a complete divestment of all tangible or in- 20 tangible assets or property, wherever located, 21 used to enable or support the operation of the 22 TikTok application in the United States. 23 (e) CFIUS VERIFICATION MEASURES.— 24 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3057 IH (1) IN GENERAL.—Without limitation on the 1 exercise of authority by any agency under other pro- 2 visions of law, and until such time as the divestment 3 required under this section is completed and verified 4 to the satisfaction of CFIUS, CFIUS is authorized 5 to implement measures CFIUS determines necessary 6 and appropriate to verify compliance with this sec- 7 tion and to ensure that the operations of the TikTok 8 application are carried out in such a manner as to 9 ensure protection of the national security interests of 10 the United States. Such measures may include, on 11 reasonable notice to ByteDance and TikTok Inc., 12 employees of the United States Government, as des- 13 ignated by CFIUS, shall be permitted access, for 14 purposes of verifying compliance with this section, to 15 all premises and facilities of ByteDance and TikTok 16 Inc., and any of their respective subsidiaries, oper- 17 ated in furtherance of the TikTok application lo- 18 cated in the United States— 19 (A) to inspect and copy any books, ledgers, 20 accounts, correspondence, memoranda, and 21 other records and documents in the possession 22 or under the control of ByteDance or TikTok 23 Inc., or any of their respective subsidiaries, that 24 concern any matter relating to this section; 25 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 3057 IH (B) to inspect or audit any information 1 systems, networks, hardware, software, data, 2 communications, or property in the possession 3 or under the control of ByteDance or TikTok 4 Inc., or any of their respective subsidiaries; and 5 (C) to interview officers, employees, or 6 agents of ByteDance or TikTok Inc., or any of 7 their respective subsidiaries, concerning any 8 matter relating to this section. 9 (2) DEADLINE FOR VERIFICATION.— CFIUS 10 shall conclude all verification procedures described 11 under this subsection within 90 days after the cer- 12 tification of divestment is provided to CFIUS pursu- 13 ant to subsection (c)(1). 14 SEC. 6. PROHIBITED TRANSACTIONS. 15 (a) IN GENERAL.—A transaction is prohibited if the 16 transaction is by any person, or with respect to any prop- 17 erty, subject to the jurisdiction of the United States, with 18 ByteDance Ltd. (a.k.a. Z(‘jie′ Tia‘odo‘ng), Beijing, 19 China, or its subsidiaries, including TikTok Inc., in which 20 any such company has any interest, involving the fol- 21 lowing: 22 (1) Any provision of services, occurring after 23 the end of the 45-day period beginning on the date 24 of enactment of this Act, to distribute or maintain 25 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 3057 IH the TikTok mobile application, constituent code, or 1 application updates through an online mobile appli- 2 cation store, or any online marketplace where mobile 3 users within the land or maritime borders of the 4 United States and its territories may download or 5 update applications for use on their mobile devices. 6 (2) Any provision of internet hosting services, 7 occurring after the end of the 45-day period begin- 8 ning on the date of enactment of this Act, enabling 9 the functioning or optimization of the TikTok mobile 10 application within the land and maritime borders of 11 the United States and its territories. 12 (3) Any provision of content delivery network 13 services, occurring after the end of the 45-day period 14 beginning on the date of enactment of this Act, ena- 15 bling the functioning or optimization of the TikTok 16 mobile application within the land and maritime bor- 17 ders of the United States and its territories. 18 (4) Any provision of directly contracted or ar- 19 ranged internet transit or peering services, occurring 20 after the end of the 45-day period beginning on the 21 date of enactment of this Act, enabling the func- 22 tioning or optimization of the TikTok mobile appli- 23 cation within the land and maritime borders of the 24 United States and its territories. 25 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 3057 IH (5) Any utilization, occurring after the end of 1 the 45-day period beginning on the date of enact- 2 ment of this Act, of the TikTok mobile application’s 3 constituent code, functions, or services in the func- 4 tioning of software or services developed or acces- 5 sible within the land and maritime borders of the 6 United States and its territories. 7 (b) EXCEPTIONS.—The prohibition under subsection 8 (a) shall not apply to the following: 9 (1) Any transaction that is not a business-to- 10 business transactions. 11 (2) The payment of wages, salaries, and benefit 12 packages to employees or contractors. 13 (3) The exchange between or among TikTok 14 mobile application users of personal or business in- 15 formation using the TikTok mobile application. 16 (4) Activities related to mobile applications in- 17 tended for distribution, installation or use outside of 18 the United States by any person, including to any 19 person subject to U.S. jurisdiction, and all ancillary 20 activities, including activities performed by any U.S. 21 person, which are ordinarily incident to, and nec- 22 essary for, the distribution, installation, and use of 23 mobile applications outside of the United States. 24 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 3057 IH (5) The storing of TikTok mobile application 1 user data in the United States. 2 (6) Any transactions necessary to effectuate the 3 divestment required by this section. 4 (c) WAIVER.—A person may submit a request to 5 CFIUS for a waiver of the requirements under subsection 6 (a). 7 SEC. 7. ENFORCEMENT. 8 (a) PROHIBITION ON EVASION AND CIRCUMVEN- 9 TION.—Any transaction or other device entered into or 10 employed for the purpose of, or with the effect of, evading 11 or circumventing this Act is prohibited. 12 (b) INJUNCTION.—Whenever it appears to the Attor- 13 ney General that any person is engaged in, or is about 14 to engage in, any act that constitutes, or would constitute, 15 a violation of this Act, the Attorney General may initiate 16 civil action in a district court of the United States to en- 17 join such violation. 18 (c) PENALTIES.— 19 (1) MATERIAL MISSTATEMENT OR OMISSION.— 20 Any person who submits a report with a material 21 misstatement or omission or makes a false certifi- 22 cation under this Act may be liable to the United 23 States for a civil penalty not to exceed $250,000 per 24 violation. The amount of the penalty imposed for a 25 VerDate Sep 11 2014 01:02 Jun 10, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3057.IH H3057 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 3057 IH violation shall be based on the nature of the viola- 1 tion. 2 (2) VIOL [Text truncated for display. Full text available on Congress.gov.]