Politics Oracle, TikTok, and the Trump administration have reportedly 'tentatively' reached a deal. Here's everything we know about the partnership that could save TikTok from Trump's threats of a US ban.

19:15  17 september  2020
19:15  17 september  2020 Source:   businessinsider.com

TikTok’s Owner Is Getting Surer Beijing Will Okay U.S. Deal

  TikTok’s Owner Is Getting Surer Beijing Will Okay U.S. Deal TikTok-owner ByteDance Ltd. is getting more confident its envisioned alliance with Oracle Corp. will pass muster with China’s regulators, a critical step in the political clash over the popular video app, people familiar with the matter said. © Bloomberg The download page for ByteDance Ltd.'s TikTok app is arranged for a photograph on a smartphone in Sydney, New South Wales, Australia, on Monday, Sept. 14, 2020. Oracle Corp. is the winning bidder for a deal with TikTok’s U.S. operations, people familiar with the talks said, after main rival Microsoft Corp. announced its offer for the video app was rejected.

a close up of a sign: Reuters © Reuters Reuters
  • The Treasury Department, ByteDance, and Oracle have reportedly "tentatively" agreed on the terms of a deal in which 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 Donald Trump's early demands that TikTok's Chinese parent company sell off its US operations.
  • According to CNBC, Oracle will take a 20% stake in a US-headquartered TikTok entity, and will host millions of users' data.
  • However, the deal is facing roadblocks: The Trump administration is pushing for US majority ownership of TikTok, and government officials are still raising national security concerns about China's access to the user data.
  • Here's what we know, what's been reported, and what questions we still have about the deal between TikTok and Oracle.
  • Visit Business Insider's homepage for more stories.

The US government's national-security review board has "tentatively agreed" on terms for a deal between Oracle and TikTok's parent company, ByteDance, Bloomberg reported on Thursday.

U.S. to start blocking TikTok and WeChat downloads Sunday

  U.S. to start blocking TikTok and WeChat downloads Sunday The U.S. will begin blocking the distribution of the Chinese apps TikTok and WeChat on Sunday, the Department of Commerce said Friday. © Provided by NBC News Commerce said in a news release that U.S. mobile platforms will be prohibited from distributing the apps, meaning new downloads will be blocked. But TikTok will not disappear entirely on Sunday. The app will still work for at least a few more weeks. Commerce said that crucial services that TikTok relies on, such as internet hosting and transit services, will not be prohibited until Nov. 12 — pushing the deadline to after the election.

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 the Beijing-based ByteDance has chosen to resolve the matter. But the company emerged as the winner this weekend, after Microsoft confirmed Sunday that its bid for TikTok was turned down.

Both Oracle and TikTok have confirmed submitting their joint deal to the US government for approval, with TikTok saying it believed the deal "would resolve the administration's security concerns." The deal's approval was expected earlier this week. However, recent questions over the deal's terms and its ability to adequately protect American users' data from China have caused the process to drag on.

Trump to block U.S. downloads of TikTok, WeChat on Sunday

  Trump to block U.S. downloads of TikTok, WeChat on Sunday Trump to block U.S. downloads of TikTok, WeChat on Sunday Reuters See more videos SHARE SHARE TWEET SHARE EMAIL What to watch next Apple delivers blowout earnings amid COVID-19, market shrugs off iPhone delays Reuters Google's $2.1 billion Fitbit deal faces EU antitrust probe: sources Reuters Google's $2.1 billion Fitbit deal faces EU antitrust probe: sources Reuters Facebook, Google absorb U.S.

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 have confirmed that the companies made a deal in which Oracle is named a "trusted technology provider." Treasury Secretary Steven Mnuchin also confirmed earlier this week 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.
  • Donald Trump told reporters Wednesday night he was "not prepared to sign off" on the proposed deal because he hadn't been briefed yet, but said he wouldn't support it if ByteDance had majority ownership of TikTok.
  • Although Trump pushed early on that the Treasury Department be paid a cut of whatever deal ByteDance made. However, the president told reporters Wednesday he discovered, "you're not allowed to do that — you're not allowed to accept money."

What is reported

  • Under the deal, the global business for TikTok — which has more than 2 billion worldwide installs outside China — would be placed into a new US-headquartered entity, the Financial Times reports. The new entity would have ByteDance as the majority shareholder and Oracle as a minority shareholder, The Wall Street Journal reported.
  • However, the Trump administration has raised concerns about ByteDance's continued majority ownership under the deal. Trump indicated Wednesday he was pushing for US majority ownership before signing off on a deal.
  • Other interested US investors — including Sequoia Capital, General Atlantic, and, potentially, Walmart — would be able to buy minority stakes in the new entity, according to The Wall Street Journal.
  • The new TikTok entity would have "independent oversight" and be managed "at arm's 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 thorny issue with Chinese regulators.
  • Oracle would 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.
  • Although the deal aims to address the US government's national-security concerns, US lawmakers are pushing for a closer look at the deal to ensure China-headquartered ByteDance can't access the data belonging to TikTok's American users.
  • Instead of an outright deal, the Oracle-TikTok relationship would be 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. Reuters reported that investors were unhappy with the price Microsoft offered and that it upset ByteDance CEO Zhang Yiming by characterizing TikTok as a security concern that only it could fix.

What's next

  • 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 — was set to review the proposed deal this week.
  • Bloomberg reported Thursday that ByteDance, Oracle, and the Treasury Department (which oversees CFIUS) had "tentatively agreed" on terms for the deal.
  • If the committee approves the deal, President Donald Trump will have to sign off on the details. On Tuesday, Trump said he had "high respect" for the 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 had already shown support for the Oracle deal, which appears to let ByteDance retain significant control.
  • Sen. Josh Hawley of Missouri, along with another group of Republican lawmakers, have urged the committee and the president to reject the deal, arguing 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 threat of a ban still looming over TikTok.

Are you an insider with insight to share? Contact this reporter at pleskin@businessinsider.com or DM @paigeleskin on Twitter.

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