Tik Tok: The Next Race
The fortune of TikTok, the eagerly popular video-sharing app, has involved plenty of plot twists since President Donald Trump signed an executive order in late August that promised to effectively ban TikTok from doing business in the US over national security concerns-unless the Chinese-owned app sold its US operations to an American company by September 20.
Oracle, a database software company whose co-founder and CEO are both open supporters of Trump, is the winning bidder. Oracle isn’t actually going to buy TikTok. Instead, it’s offered to buy the rights to take over TikTok’s US data operations (which Microsoft also originally wanted to do, but Trump discouraged-more on that later), further complicating the situation.
The planned deal between Oracle and ByteDance, the Chinese company that owns TikTok, comprises a number of extremely political, volatile, and complex factors. By this point, you may be confused about what’s going on and how TikTok got here in the first place. Oracle won’t buy TikTok outright, and it’s not clear if that will moderate national security concerns. Right now, there’s still a lot we don’t know about the details of the planned TikTok-Oracle deal, since the terms aren’t public. But one thing we do know is that Oracle has said it’s proposing to become a “trusted technology provider” of ByteDance, rather than buying the company’s US operations outright.
Here’s Oracle’s statement Monday morning: “Oracle confirms Secretary Mnuchin’s statement that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle will serve as the trusted technology provider. Oracle has a 40-year track record providing secure, highly performant technology solutions. If this Oracle-TikTok proposal goes through as planned-not as a full sale-it raises the question of why President Trump issued the executive order pressuring TikTok to sell off its entire US operations in the first place.
Trump said he issued the executive order over grave national security concerns. Namely, that the Chinese government could allegedly pressure TikTok to funnel sensitive US user data back to Beijing because ByteDance is a Chinese-owned company. Another concern is that TikTok could be censoring topics on TikTok that the Chinese government doesn’t approve. TikTok has constantly professed that it stores all US data in the US and Singapore, which would seemingly make it difficult for the Chinese government to reach. It’s also denied censoring content in the US on behalf of the Chinese government.
While there isn’t any public indication proving that the Chinese government has ever forced TikTok to spy on US users or control what they see and discuss on the app, it’s also hard to rule out that could ever happen. The Chinese government regularly uses authority over domestic companies for political purposes, such as pressuring tech companies to hand over user data. “If these things were a concern before, it’s not clear why that wouldn’t be a concern now,” Bobby Chesney, a professor at the University of Texas who specializes in national security law, told Recode. Although it’s unknown so far if Trump will approve this deal, Treasury Secretary Steven Mnuchin said about the deal on CNBC Monday morning, “We have a lot of confidence in both Microsoft and Oracle; they [ByteDance] have chosen Oracle.”
Another key player in all of this is the Chinese government. Previously, it had reportedly said that it won’t let ByteDance sell off its secret sauce-its registered recommendation algorithm to the US. So, from ByteDance’s perspective, a partial sale to Oracle that doesn’t include the prized algorithm could be a win-win situation for both the US and the Chinese government.
Oracle’s close relationship with Trump could be helping its prospects of a deal with TikTok. Oracle’s co-founder Larry Ellison and CEO Safra Catz are rare supporters of Trump among mostly liberal Silicon Valley tech executives. In February, Ellison hosted a massive fundraising campaign for Trump at his personal estate in Coachella Valley. And Catz was one of the only major tech CEOs to serve on Trump’s transition team when he took office. In August, when it was first reported that Oracle was weighing a bid for TikTok, Trump spoke approvingly, calling Oracle “a great company” and Ellison a “tremendous person.”
The cozy relationship between Oracle’s leadership and Trump is raising questions about whether or not that has played a role in the new plan for TikTok’s future in the US. “I think with Oracle and the relationship they have with the administration, one wonders, ‘Now, what kind of a level playing field was this?’” said Chesney. But that’s all speculative, Chesney said, since the terms of the deal are still unknown. It’s also entirely possible that Oracle simply made a higher offer than Microsoft, or laid out better terms.
Even some Oracle employees-admittedly ones who disapprove of their company leaders’ ties to the Trump administration-are scrutinizing the TikTok deal. Employees on Monday had not heard anything internally from Oracle leadership as of midday and were hunting around for details.