Tag Archives: tiktok

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.


U.S. Department of Commerce Prohibits WeChat and TikTok



The United States Department of Commerce announced a prohibition on transactions relating to mobile apps WeChat and TikTok. This is being done in response to President Trump’s Executive Orders that were signed on August 6, 2020. The action by the Department of Commerce describes the decision as one made “to safeguard the national security of the United States.”

Here is a small portion of the Department of Commerce’s announcement:

…While the threats posed by WeChat and TikTok are not identical, they are similar. Each collects vast swaths of data from users, including network activity, location data, and browsing and search histories. Each is an active participant in China’s civil-military fusion and is subject to mandatory cooperation with the intelligence services of the CCP. This combination results in the use of WeChat and TikTok creating unacceptable risks to our national security.

Has the U.S. government ever banned an app before? If so, I don’t remember that happening. The thing that bothers me is that there are several social media platforms that collect the same kinds of data from American users, (but are not involved with China). My concern is that the prohibition on WeChat and TikTok could be used as precedent for the Trump Administration to ban Twitter and/or Facebook.

As of September 20, 2020, the following transactions are prohibited:

  • Any provision of service to distribute or maintain the WeChat or TikTok mobile applications, constituent code, or application updates through an online mobile application store in the U.S.;
  • Any provision of services through the WeChat mobile application for the purpose of transferring funds or processing payments within the U.S.

As of September 20, 2020, WeChat, and as of November 12, 2020, for TikTok, the following transactions are prohibited:

  • Any provision of internet hosting services enabling the functioning or optimization of the mobile application in the U.S.;
  • Any provision of content delivery network services enabling the functioning or optimization of the mobile application in the U.S.
  • Any provision directly contracted or arranged internet transit or peering services enabling the function or optimization of the mobile application in the U.S.;
  • Any utilization of the mobile application’s constituent code, functions, or services in the functioning of software or services developed and/or accessible within the U.S.;

CNBC reported that WeChat is owned by the Chinese company Tencent. TikTok’s parent company is Beijing-based Byte Dance. CNBC points out that the prohibition means Apple and Google will have to pull those apps from their libraries.


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.


Microsoft’s Bid for TikTok was Rejected



ByteDance has selected Oracle as TikTok’s technology partner for its U.S. operations, The New York Times reported. This decision comes after President Trump issued an executive order that requires ByteDance to divest from its U.S. TikTok business withing 90 days (from the issuing of the order).

Microsoft released the following statement:

ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combating disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.

Politico reported that the exact value or structure of the deal between Oracle and TikTok was not immediately clear. Will Oracle own part or all of TikTok’s assets? According to Politico, a source familiar with the matter described Oracle as a technology partner to TikTok and did not describe the transaction as a sale.

From this, it appears that ByteDance has potentially fulfilled at least part of President Trump’s executive order. ByteDance could be in the process of divesting from its US business with TikTok, and might able to do it before the deadline of September 20.

Another part of the executive order requires TikTok to destroy all data that was obtained from the application in the United States. If TikTok has not been outright sold to Oracle, I cannot help but wonder which company is going to be held responsible if that data is not destroyed.


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?


TikTok is Offering Refunds for Ad Campaigns



What happens when a company is the subject of a presidential executive order? For TikTok, it apparently means it is time to start preparing advertisers for a possible ban of its app in the United States, and to offer refunds for ad campaigns that TikTok is unable to run, according to Reuters.

The executive order, signed by President Trump, would ban U.S. transactions with TikTok and WeChat, the Chinese-owned messaging app, starting on September 15, 2020.

Earlier this month, Microsoft stated in a blog post that the company is committed to acquiring TikTok “subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.” From there, Microsoft will pursue discussions with TikTok’s parent company, ByteDance. The discussions are to be completed no later than September 20, 2020.

Among other measures, Microsoft would ensure that all private data of TikTok’s American users is transferred to and remains in the United States. To the extent that any such data is currently stored or backed-up outside the United States, Microsoft would ensure that this data is deleted from servers outside the the country after it is transferred.

The Verge reported that the executive branch has the power to levy sanctions against individuals and corporations, like it did with Huawei. The difference between that, and the executive order regarding TikTok, is that these sanctions are supposed to be put in place by the Commerce Department – not the White House.

As such, the situation could lead to legal challenges. TikTok posted a blog in which the company stated, “We will pursue all remedies available to us in order to ensure that the rule of law is not discarded and that our company and our users are treated fairly – if not by the Administration, then by the US courts.”

This is going to get messy very quickly, especially if Microsoft acquires TikTok from ByteDance before the September 15, 2020, deadline set in the executive order. It could lead to a legal battle between Microsoft and the White House. Personally, I am suspicious that the date on the executive order was intended to persuade Microsoft to cancel discussions with TikTok.


Amazon Tells Workers to Delete TikTok in Email Sent in Error



Amazon apparently sent its workers an email asking them to remove TikTok from their mobile devices. This was first reported by The New York Times, and several news sites have since posted about it as well. Later, Amazon changed its mind and said that the request had been sent in error.

Taylor Lorenz, a reporter for The New York Times Fashion and Style section, posted a tweet with a screenshot of the email that Amazon sent to its employees. The email was titled: “Action required: Mandatory removal of TikTok by 10-Jul”.

Hello,
Due to security risks, the TikTok app is no longer permitted on mobile devices that access Amazon email. If you have TikTok on your device, you must remove it by 10-Jul to retain mobile access to your Amazon email. At this time, using TikTok from your Amazon laptop browser is allowed.

According to The Verge, the email was obtained and independently published by multiple reporters on Twitter. Later, an Amazon spokesperson told The Verge: “This morning’s email to some of our employees was sent in error. There is no change to our policies right now with regard to TikTok.”

To me, this seems a little bit strange. Why would a company as big as Amazon write a very specifically worded email telling its employees that TikTok was no longer permitted on mobile devices that access Amazon email… only to walk that back after the email was posted on Twitter? Did someone at Amazon accidentally send that email earlier than planned? Or was Amazon unhappy that the email became public knowledge?

What we do know is that the U.S. Navy banned TikTok from government-issued mobile devices because the app represented a “cybersecurity threat”. U.S. Army cadets were also asked not to use TikTok. Some members of Congress expressed that they think TikTok poses “national security risks”.

Amazon appears to have had enough of a security concern with TikTok to tell its employees to delete it. Later that same day, Amazon seems to have changed its mind about that. One cannot help but wonder what happened behind the scenes.