Tag Archives: ByteDance

Trump “Approved the Deal in Concept” Between TikTok and Oracle



One day after the U.S. Department of Treasury stated that WeChat and TikTok would be prohibited in the United States, President Donald Trump has “approved the deal in concept”. The more I read about This situation, the murkier it gets.

The U.S. Department of Treasury posted a new statement:

The President has reviewed a deal among Oracle, Walmart, and TikTok Global to address the national security threat posed by TikTok’s operations. Oracle will be responsible for key technology and security responsibilities to protect all U.S. user data. Approval of the transaction is subject to a closing with Oracle and Walmart and necessary documentation and conditions to be approved by CFIUS.

Bloomberg has reported the following: “I approved the deal in concept,” Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina. “If they get it done, that’s great. If they don’t, that’s OK too.” I have no idea what President Trump means by that.

According to Bloomberg, the new company will be called TikTok Global. It has agreed to funnel $5 billion new tax dollars to the U.S. and set up an education fund, which Trump said would satisfy his demand that the U.S. government receive a payment from the deal.

However, Reuters has reported that ByteDance was not aware that this deal involved a $5 billion education fund. On a social media post, ByteDance said it was the first time it had heard that news.

It gets even stranger. The Wall Street Journal reported that ByteDance would retain roughly 80% ownership of TikTok Global “according to people familiar with the situation”. Because ByteDance is about 40% owned by U.S. investors, the new company can be described has having majority American ownership. To me, it sounds like TikTok Global might remain connected to ByteDance despite this deal.

Bloomberg also reported that TikTok promised to hire an additional 15,000 jobs, more than the 10,000 positions the company already pledged to fill earlier this year. It appears that TikTok Global will be an independent company. And that TikTok Global “will likely” be headquartered in Texas.

TikTok stated that the proposal between TikTok, Oracle, and Walmart “will resolve the security concerns of the US Administration and settle questions around TikTok’s future in the US”.

How is Walmart connected to this deal? CNBC reported that Walmart said it has tentatively agreed to purchase a 7.5% stake, and CEO Doug McMillon would serve as one fo the five board members of the newly created TikTok Global company.

In a press release, Oracle announced that it was chosen to become TikTok’s secure cloud technology provider. Oracle said this decision by TikTok was heavily influenced by Zoom’s recent success in moving a large portion of its video conferencing capacity to the Oracle Public Cloud.


Oracle Confirms Deal with ByteDance



Yesterday, Microsoft announced that its bid to buy TikTok from ByteDance had been rejected. It had been reported that ByteDance selected Oracle to be its technology partner for U.S. operations, but it was hard to confirm. Today, Oracle provided a statement:

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.

CNBC reported that this deal still needs U.S. government approval.

The executive order that President Trump signed on August 14, 2020, required ByteDance to divest itself from Musical.ly (now known as TikTok). It must do so within 90 days of the signing of the executive order. Any data obtained or derived from the TikTok application or Musicial.ly application derived from users in the United States must be destroyed.

Later, CNBC reported that, according to people familiar with the matter, the proposal between ByteDance and Oracle would keep TikTok together under ByteDance’s operational control. Oracle will be a trusted technology partner who will store and secure the data within U.S. premises. TikTok said it is planning to disclose its algorithm to third parties.

ByteDance has submitted a proposal that avoids selling the U.S. assets or all of TikTok, CNBC reported. This doesn’t match the requirements in the executive order. That could mean that TikTok will soon have to close down within the United States. The longer this goes on, the messier it gets.


Trump Orders ByteDance to Divest From TikTok Within 90 Days



President Trump has issued an executive order requiring ByteDance to divest from its U.S. TikTok business within 90 days, CNBC reported. Part of the executive order requires ByteDance to prove that it has destroyed all data that was obtained or derived from the TikTok application in the United States.

…The transaction resulting in the acquisition by ByteDance of Musical.ly, to the extent that Musical.ly or any of its assets is used in furtherance or support of, or relating to, Musical.ly’s activities in interstate commerce in the United States … is hereby prohibited, and ownership of ByteDance of any interest in Musical.ly in the United States, whether effected directly or indirectly through ByteDance’s subsidaries, affiliates, or Chinese shareholders is also prohibited…

The wording in the executive order might be a little confusing to those who are unaware of how ByteDance, TikTok, and Musical.ly connect. ByteDance bought Musical.ly in 2019.

The FTC learned that Musical.ly (which quickly became TikTok) illegally collected personal information from children. User accounts on Musical.ly were public by default, and it appears there were some problems with adults trying to contact children on the Musical.ly app. According to the FTC, operators of the Musical.ly app were aware that a significance percentage of users were under the age of 13.

TikTok agreed to pay $5.7 million to settle the allegations made by the FTC.

The executive order requires ByteDance to sell or spin off its U.S. TikTok business within 90 days. It might be possible. Microsoft has been in discussions with ByteDance about a potential acquisition of TikTok. A previous executive order required ByteDance to reach a deal within 45 days. If that did not happen, then the order would force U.S. based app stores to stop distributing the TikTok app. The new executive order extends that timeline to 90 days.

I cannot help but wonder what happens if Microsoft acquires TikTok. Do the problems with it (and Musical.ly before it) become Microsoft’s problems to resolve? Will Microsoft be expected to provide proof that the data ByteDance gleaned from U.S. users has been destroyed? Or will ByteDance have to provide that proof itself?