Yet another update on the TikTok U.S. situation, which is now becoming a daily occurrence.
According to reports, Oracle is indeed firming as the favorite to become TikTok’s U.S. partner, with the company now weighing a proposal that would see it partner with TikTok, and parent company ByteDance, on security and operational elements, while the actual TikTok algorithm, which powers its compelling “For You” feed, would remain in full control of Chinese-owned ByteDance.
The main focus of this proposal, as reported by Bloomberg, would be U.S. user data security, addressing a key element of the “Protecting Americans from Foreign Adversary Controlled Applications Act”.
As per Bloomberg:
“A proposal was circulated within the Trump administration last week that would have Oracle work with U.S. buyers to vouch for the safety of users’ data. That would include guarantees that an updated US version of TikTok would not contain a back door that China’s government could exploit.”
As noted, this is one of the key concerns addressed within the Foreign Adversary Controlled Applications Act, which went into law on January 19th.
It doesn’t, however, fully address all elements of that bill, and may not pass more in-depth legal scrutiny, based on a more specific reading.
According to the parameters of the new law, any deal that enables TikTok to remain in operation in the U.S. deal has to:
- Ensure that foreign-owned entities don’t own more than 20% of the app
- Ensure that foreign-owned entities do not have direction or control over the platform
- Ensure that foreign-owned entities do not have an “operational relationship” in regards to its content recommendation algorithms, nor with respect to data sharing
So it seems that this current proposal wouldn’t cut the mustard, with TikTok, based on this reporting, theoretically keeping control of the platform’s algorithm, which would be in direct violation of the act.
This has also been a sticking point for the Chinese government, with CCP officials stating that they will not allow the sale of TikTok’s algorithm as part of any deal with the U.S.
As such, U.S. officials seemingly still have some work to do on this front, but then again, maybe the threat of a full ban of the app, and the loss of many billions of dollars for the company, could be enough to convince Chinese officials to re-consider this element.
Though that still wouldn’t meet the above-noted legal requirements, while it’ll also be difficult for ByteDance to maintain a critical stake in the app, given the 20% foreign-ownership threshold.
Basically, it sounds like a deal is still a way off, even if the White House is getting close to a proposal that it prefers. It still seems like Chinese officials will have a significant say in what comes next, while the current discussions may not yet be meeting the legal specifics.
We’ll soon find out. The government has till April 4th to come up with an alternative TikTok deal (though President Trump has already indicated that he will extend this if necessary).
