TikTok proposal needs approval from both China and U.S — ByteDance

Daniel Fowler
September 18, 2020

ByteDance's proposal for United States software firm Oracle to become a technology partner in its TikTok app will ultimately need approval from both Chinese and USA officials.

Previously, TikTok confirmed that it had submitted a proposal to the USA administration that "would resolve the administration's security concerns", making Oracle its technology partner in the country but keeping majority ownership of the app.

"Conceptually, I can tell you that I don't like that", Trump told a news conference when asked about ByteDance's proposal. Oracle, Walmart and Treasury did not immediately comment.

TikTok has found a dance partner to keep it going in the U.S., but it has to convince the feds not to let the deal flop.

President Trump has ordered ByteDance to divest TikTok amid US concerns user data could be passed to China's Communist Party government.

ByteDance has also explored divesting a majority stake in the USA business of TikTok, and in July it signed a letter of intent with Microsoft Corp that contemplated the sale of that business to the Redmond, Washington-based company.

While parties struggle to reach a deal, Chinese President Xi Jinping said Thursday on a tour of a factory that "innovation is the most important quality of business management, and it is also what we must overcome obstacles to do in the future".

Former national security officials and regulatory lawyers say that ByteDance faces an uphill struggle to convince the White House to allow it to keep majority ownership of TikTok.

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US President Trump has ordered ByteDance to divest TikTok amid US concerns user data could be passed to China's Communist Party government.

"I have to see the deal", President Trump told White House reporters on Wednesday evening.

On Thursday Reuters reported that ByteDance was preparing to relinquish control of TikTok to American investors after agreeing to last-minute demands from the U.S. government.

Trump also indicated Wednesday that he wouldn't support the deal as it has now been reported.

On Monday, Republican Senator Josh Hawley sent a letter to Treasury Secretary Steve Mnuchin, who heads a national security panel reviewing the proposal, calling for the deal to be scuttled, if it does not allow for the "full emancipation of TikTok software from potential Chinese Communist Party control".

The term sheet will grant Oracle the right to inspect TikTok's source code and includes numerous provisions to ensure data security and requirement that all US users data remains in the United States housed by Oracle, the source said.

It is not clear what Oracle or Walmart will pay for its stake. In an August 6 order, Trump said TikTok "reportedly censors content that the Chinese Communist Party deems politically sensitive", is potentially a source for disinformation campaigns and "threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information".

ByteDance said on Thursday it would need China to approve the proposed deal with the White House, indicating how its bid to stave off a ban in the United States could be further complicated. Mr Trump has threatened to ban the app unless its USA operations are sold to a U.S. firm and the United States government receives a share of the proceeds. The app was relaunched the following year as TikTok.

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