The Trump administration’s efforts to strong-arm Beijing-based ByteDance into selling its U.S. subsidiary TikTok to an American company are closing in, with enterprise software giant Oracle attempting to get regulators to clear a deal. Unsurprisingly, everyone involved is really making a garbage fire out of it.
The White House, claiming that TikTok’s owner poses a security threat because Chinese tech companies can’t be trusted not to spy on Americans, issued an executive order threatening to “ban” the app by Sept. 30 unless ByteDance gives up the goods to a U.S. firm. Oracle has since become the dark horse contender to get in on the wildly profitable app, beating out others like Microsoft and Walmart — rather cozily, as co-founder Larry Ellison is a major Trump fundraiser and CEO Safra Catz was on the admin’s 2016 transition team. (The company also has close ties to U.S. intelligence agencies.)
Oracle has thrown a wrench in the process: It’s seeking a deal in which it would not become TikTok’s owner. Instead, it would become a minority stakeholder and “trusted technology provider” with unclear responsibilities, and ByteDance has made clear it doesn’t want to sell key assets like TikTok’s algorithms. Bloomberg reported on Wednesday that ByteDance may however agree to allow Oracle to review its source code for any theoretical back doors and form an independent review board “approved by the U.S. government.”
Trump reportedly had to be talked out of banning TikTok outright by Treasury Secretary Steven Mnuchin, who redirected the president’s random animus towards supporting a sale. According to the Wall Street Journal, Trump told reporters on Wednesday that he’s “heard they’re very close to a deal” and he has “high respect” for his buddy Ellison. But the New York Times also reported that Republican hardliners in the Senate who backed the initial push to crack down on TikTok say their national security concerns wouldn’t be resolved with Oracle as “trusted technology provider.”
Senators Marco Rubio, Thom Tillis, and John Cornyn wrote in a letter to the administration saying they had “significant concerns” and believe Oracle’s offer is “insufficient in achieving the goals of protecting Americans and U.S. interests,” the Times reported. Senator Josh Hawley — no stranger to terrible ideas on tech — authorised a separate letter musing “perhaps, given constraints imposed by Chinese law, the only feasible way to maintain Americans’ security is to effectively ban the TikTok app in the United States altogether.”
Sceptics reportedly include Secretary of State Mike Pompeo, who believes anything short of majority control won’t prevent espionage, and Attorney General Bill Barr. Both officials are now talking directly with Oracle execs, according to Bloomberg.
The Wall Street Journal reported that U.S. officials are pushing Oracle to partner with Walmart to get over 50 per cent control of TikTok and that a “person familiar with the matter” suggested they could take the company public to do so. (This would, in theory, conveniently allow Trump to brag about orchestrating a massive IPO/direct listing.) Recode, citing internal Slack messages, also reported that many of Oracle’s own employees are sour on what they see as a corrupt deal and confused about how “trusted technology partner” status could avert spying.
“I see this as kissing Trump’s arse and damaging Oracle even further in the developer community, giving them more of a reason to hate us,” one employee told Recode. Another told the site many staff “have a gross taste in their mouth” about the White House’s “role in all this and the perceived closeness of Larry and Safra to Trump. Just feels to us like that’s what got the business.”
The latter employee did note that such an arrangement would be good for Oracle’s stock price.
Nothing about the terms of the deal are set in stone and all of this could easily change.
Trump did admit defeat on his efforts to shake down ByteDance and TikTok’s eventual buyer for “very substantial” direct payments to the U.S. Treasury for facilitating the deal — tantamount to a bribe. In his remarks to reporters on Wednesday, he said “Amazingly, I find that we’re not allowed to do that.” The president may also have no idea what’s going on with the Oracle bid, or that the reported details involve ByteDance retaining majority ownership.
“Conceptually, I can tell you I don’t like that,” Trump said. “If that’s the case, I’m not going to be happy with that.”
The Committee on Foreign Investment in the U.S., a Commerce Department organ that will need to approve a deal, heard out the companies’ offers on Wednesday. Trump told reporters he will review the deal on Thursday morning.
Note that at no point has the U.S. 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. Nor does any of this address whether banning TikTok, which has 100 million U.S. users, is merely a politically motivated abuse of power or setting an alarming precedent for arbitrary, authoritarian censorship of the internet. But hey, at least some of the president’s buddies might get richer.