ByteDance says proposal on TikTok still needs China, U.S. approvals

Daniel Fowler
September 18, 2020

"It has to be 100 percent as far as national security is concerned".

"I'm not prepared to sign off on anything", Trump said, adding that he needs to hear more details of the proposal. He's somebody I know.

ByteDance founder and CEO Yiming Zhang's decision to drop his pursuit of a sale of TikTok's United States operations to Microsoft in favour of a partnership with Oracle was the culmination of weeks of pressure from China's government and the Beijing-based firm's investors, according to people familiar with the deliberations.

According to sources familiar with ByteDance's proposal, Oracle would become the company's technology partner managing TikTok's data in the U.S.

Oracle will become a minority owner of TikTok as part of its deal with the Chinese creator of the popular social video-sharing app, according to a report published Tuesday in The Financial Times.

The deal - described as a partnership between ByteDance and Oracle - does not appear to meet the requirements of Trump's executive order, which required ByteDance to fully divest from TikTok's operations in the U.S. However, Trump on Tuesday seemed to signal that he was open to it, telling reporters his team was "very close to a deal". We are looking into that right now. "We care deeply about protecting the data and security of American citizens". On Wednesday, Press Secretary Kayleigh McEnany confirmed President Trump will soon announce his decision on the proposed sale of TikTok's US business to an American company.

TikTok maintains that it has not shared US user data with the Chinese government and would not do so, says it does not censor videos at the request of Chinese authorities and notes that moderators for United States operations are led by a USA team.

"It's not clear the first goal has been met and the second goal is even more hard", said Stewart Baker, a national security lawyer at Steptoe & Johnson and a former assistant secretary with the Homeland Security Department.

The companies haven't fully addressed Trump's repeated demand for a payment to the U.S. Government.

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Even if security officials recommend Trump block the deal, the president has the final say and he can overrule their recommendation. Bloomberg reported that Treasury Secretary Steven Mnuchin had reviewed the proposed deal.

Note that at no point has the USA government offered any proof that Chinese intelligence, military, or security agencies have ever gained access to U.S. user data through TikTok or interfered with its operations - the whole rationale for forcing the sale is mere suspicion such a situation could arise in the future.

TikTok and the Treasury Department declined to comment.

TikTok and Oracle did not immediately respond to Business Insider's requests for comment. The panel assesses deals for national security implications by looking at factors that include: US business's contracts and ties with the federal government; as well as whether the deal involves critical infrastructure, such as transport systems, data networks and other communication systems.

Bytedance has been working with Cfius since October 2019 on addressing the committee's concerns, according to a person familiar with the matter, and for months has been trying to separate somewhat from China, including hiring a new CEO and giving autonomy to USA executives for the app's bug fixes and product changes. The company had already began moving data and content moderation to the USA, where it stores its data with firms like Inc. and Alphabet Inc.'s Google, with backup servers in Singapore.

ByteDance's plan calls for restrictions in its control of TikTok, the sources said.

"As this deal appears to fall short of a full acquisition, serious questions remain with regard to Oracle's role in TikTok's USA operations, the type of technology Oracle will be providing ByteDance, and the question of what will happen to the crucial algorithms, which make the application function", the senators added. Nor does any of this address whether banning TikTok, which has 100 million USA users, is merely a politically motivated abuse of power or setting an alarming precedent for arbitrary, authoritarian censorship of the internet. Only the headline has been changed.

This story has been published from a wire agency feed without modifications to the text.

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