- The Committee on Foreign Investment in the US, or CFIUS (pronounced siff-ee-yus,) is a government body whose members have the power to launch an investigation into business deals that involve foreign investment in US firms on national security grounds.
- It determines if deals pose national security risks, but the group does not hold the power to block deals outright – only a president’s executive order can do that.
- However, its designation that a deal involves security threats often results in investors standing down from moving forward with the deal.
- The committee was formed in 1975, but a 2018 act passed under the Trump administration gave it a whole new burst of power that it has wielded on deals involving the tech industry and Chinese investors.
- CFIUS reportedly is behind the Sept. 15 deadline set for Microsoft and ByteDance to come to an agreement on a potential TikTok acquisition deal.
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One of the latest developments to the ongoing talks of Microsoft’s possible acquisition of TikTok was President Trump’s reported approval of a would-be deal between the two tech companies. However, per a Monday Reuters report, Trump will only let it proceed if the two tech giants can come to an agreement in 45 days, or by Sept. 15.
That deadline was reportedly drawn up by the Committee on Foreign Investment in the US, or CFIUS. If you’re curious about how to pronounce the acronym, it’s siff-ee-yus. You can hear it pronounced in this video.
CFIUS is a government panel whose members are tasked with reviewing business and real estate transactions that involve foreign investments made in US firms. They then conclude if the potential deals pose any national security risks or not. If they decide a deal poses such threats, it doesn’t necessarily mean that the deal won’t move forward – only the president’s executive order can do that, and only about five deals have been blocked that way since 1990 as Bloomberg notes. But it still often leads to companies standing down anyway.
The body was formed in 1975 and has reviewed thousands of deals, and a 2018 act, dubbed FIRRMA, passed under the Trump administration gave it a whole new bout of power. The new regulations gave CFIUS greater jurisdiction in scrutinizing deals – including much more so in the tech world.
One of the most recent high-profile tech investigations was when CFIUS probed the Singapore-based chipmaker Broadcom’s $US117 billion plan to acquire its US rival, California-based Qualcomm. President Trump ended up issuing an executive order blocking the would-be takeover citing national security concerns in early 2018.
Since around 2016, CFIUS has delved more so into scrutinizing deals that involve Chinese tech firms, as the Wall Street Journal reported, and has reviewed 114 deals involving Chinese investment between 2016 and 2017.
All of which is to say this committee has been given much more control in recent years over its ability to investigate outside investments in US companies, and it’s playing a pivotal role in the Trump-China-TikTok-Microsoft discussions.