By Joséphine Li
TikTok has been rapidly gaining popularity in the US and other western countries and has become the first Chinese social media platform to attract users and gain major traction outside of its home country. In the first three months of this year alone, it was downloaded more than 315 million times. According to Sensor Tower, an analytics company, the staggering figure shows that TikTok has more quarterly downloads than any other app in history.
But Trump and other US politicians have stated that the app poses a threat to national security because the Chinese government could use it as a spying tool. Authorities have also expressed concern that the app could be used to collect personal data on US citizens or censor speech considered to be sensitive by the Chinese government.
TikTok has denied the allegations, and the company has made clear that its data centers are entirely located outside of China, and most importantly, none of the data is subject to Chinese law.
The agreement with Oracle comes just days before the ban on TikTok in the US was scheduled. After September 20, the Commerce Department is expected to define what types of business transactions involving TikTok will be banned in the country, according to an executive order signed by Trump on August 6.
It remains unclear whether TikTok’s partnership with Oracle would allow the short-form video-sharing app to avoid the ban. The scope and wording of the order, as well as Trump’s remarks about TikTok, have led to confusion about the way in which a ban would be enforced. In another executive order, Trump said TikTok must find a buyer by November 12.
In addition, an employee of TikTok has challenged the ban in federal court and is expecting a judicial decision to suspend the August 6 executive order. TikTok has also sued the Trump administration over one of the orders, saying it was “heavily politicized”. A hearing to consider a plea is scheduled for September 16.
The exact nature of the agreement between Oracle and TikTok remains unknown. Other partnerships between foreign companies and the US that have been vetted by authorities could serve as potential templates, experts say.
When Softbank, a Japanese tech conglomerate, acquired a 78% stake in Sprint in 2013, the two companies agreed to several conditions related to national security. A new member of Sprint’s board was appointed. The Department of Defense, Department of Homeland Security and Department of Justice were also authorized to review and veto transactions for certain kinds of equipment.
The focus for ByteDance and Oracle collaboration will be on “how they build it for US citizens involved and the information they have on Americans,” said James Lewis, an adviser on the SoftBank-Sprint deal. The keywords for collaboration should be “transparency” and “oversight.”
He then added that an “intermediary entity” could be created to examine the relationship between ByteDance and TikTok. The agreement could also involve limiting the amount of information ByteDance has access to, or putting approved Americans on the company’s board.
Even if the two sides agree on how to structure such a partnership, the agreement between Oracle and TikTok will still be extraordinarily complex, says Harry Broadman, a former member of the Committee on Foreign Investment in the US (CFIUS), the government body that vets certain transactions that could give foreign investors control of a US business.
Tensions between China and the US have been escalating ahead of the election in November. The US government has targeted several Chinese companies — from Wechat to Huawei and TikTok — that Trump has accused of threatening national security.
Chinese state media pointedly reported on Monday that ByteDance would not sell the US operations of TikTok to Oracle or Microsoft, and ByteDance would not “provide the source code” to any US buyers.
It’s unclear how much say Beijing will have in the arrangement. In August, China revised rules on selling certain technologies to foreign buyers. The updated list includes data processing, text, and speech recognition — technologies that experts say TikTok is using.
While the notices did not mention ByteDance or TikTok, experts have pointed out that the rule change might require ByteDance to obtain government permission before it could sell TikTok to a foreign company.
At a regular press briefing on September 15, the Chinese foreign ministry declined to comment about the Oracle partnership when asked by reporters. Instead, it reiterated longstanding criticisms about the US government’s opposition to Tiktok.
The spokesman, Wang Wenbin, thinks that the United States, in the absence of any evidence, has abused the power of the state under the pretext of national security to unreasonably suppress and intimidate non-US companies that are in a leading position in the specific field.
“China will firmly support the relevant companies to safeguard their own legitimate interests and rights,” says Wang.
Oracle’s apparent victory represents a blow to Microsoft, which had been gunning for TikTok for weeks. Analysts had described Microsoft’s acquisition of TikTok as a possible “coup” — an opportunity to acquire one of the world’s fastest-growing apps at a time when TikTok might be desperate to strike a deal.
“We believe our proposal would have been beneficial for TikTok’s users, while protecting national security interests,” Microsoft said in a blog post Sunday. “We made clear our principles in our August statement. In terms of combatting disinformation, privacy, and cybersecurity, we will make significant changes to ensure that our services meet the industry’s highest standards.”
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