TikTok: What we know about Oracle partnership and Trump’s China fears
- The US government is expected to review a deal where Oracle would become TikTok’s “trusted technology provider” in the US.
- No details have been made official, but reports indicate the deal is a far cry from President Trump’s early demands that TikTok-parent ByteDance sell off its US operations. However, the deal’s framework does seem to satisfy some of the national-security concerns the US government has long raised.
- Here’s what we know, what’s been reported, and what questions we still have about the proposed deal between TikTok and Oracle.
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The US government is expected to review a deal between Oracle and TikTok-parent ByteDance on Tuesday, potentially ending the months-long battle over TikTok’s ownership and status in the US.
Oracle, best known as the leading provider of database software and a $187 billion tech titan in its own right, is the unlikely and unexpected partner Beijing-based ByteDance has chosen to resolve the matter, emerging as the winner this weekend after Microsoft confirmed Sunday that its bid for TikTok was turned down.
Oracle and TikTok both confirmed in statements that they submitted their joint deal to the US government for approval, with TikTok saying it believed the deal “would resolve the Administration’s security concerns.”
Other than that, few details about the deal — or what it means for US-China tensions — have been revealed.
What has been confirmed
- TikTok and Oracle each confirmed that Oracle was named a “trusted technology provider.” Treasury Secretary Steven Mnuchin also confirmed that ByteDance and Oracle had submitted the deal to the US government for review.
- Mnuchin told CNBC on Monday that under the proposed deal, ByteDance committed to establish TikTok as a US-headquartered global company and create 20,000 new jobs.
What is reported
- The global business for TikTok, which has more than two billion worldwide installs outside of China, will be placed into a new US-headquartered entity, the Financial Times reports. The new entity will have ByteDance as the majority shareholder, and Oracle as a minority shareholder, The Wall Street Journal reported.
- Other interested US investors — including Sequoia Capital, General Atlantic, and potentially Walmart — will be able to buy minority stakes in the new entity, according to The Wall Street Journal.
- The new TikTok entity will have “independent oversight” and be managed “at arms length” by ByteDance, the Financial Times reported.
- One concern was whether TikTok would retain its renowned algorithm under the deal. The Financial Times reported that TikTok would continue to have access to the recommendation algorithm surfacing videos on users’ “For You” pages. This would avoid any questions over the transfer of ownership of the algorithm to a US buyer, sidestepping a potentially thorny issue with Chinese regulators.
- Oracle will reportedly take over management and processing of TikTok’s user data either in the US or globally — though Reuters and the Financial Times report different possibilities.
- Instead of an outright deal, the Oracle-TikTok relationship is more of a “partnership” without the “exchange of significant assets,” the Wall Street Journal first reported.
What we don’t know
- We don’t know why ByteDance’s deal with Microsoft, which seemed sure for weeks, fell apart at the last minute. Reuters reported that investors were unhappy the price that Microsoft offered, and that it upset ByteDance CEO Zhang Yiming by characterizing TikTok as a security concern that only it could fix.
- The Committee on Foreign Investment in the US — which reviews transactions between foreign and American companies and declared last month that ByteDance had to divest its US operations — is set to review the proposed deal on Tuesday, according to The Wall Street Journal.
- If CFIUS approves the deal, President Donald Trump will have to sign off on the details. On Tuesday, Trump said he had “high respect” for Oracle cofounder Larry Ellison, without elaborating.
- The Chinese government will also have to agree to the terms before the deal is official. The Financial Times reported that Chinese officials have already shown support for the Oracle deal, which appears to let ByteDance retain significant control.
- Some US lawmakers, like Senator Josh Hawley of Missouri, have urged CFIUS and the president to reject the deal, arguing that it is too lenient and doesn’t do enough to assuage national-security concerns.
- If the deal is rejected, it could send negotiations back to square one, with a potential ban still looming over TikTok.
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