Categories: Agenda

Deal for Oracle’s partnership with TikTok will undergo Trump’s national security review: ‘decision will be political’

Oracle's partnered with TikTok. Trump's national security review is on the agenda

TikTok, owned by the Chinese company ByteDance, will undergo a national security review of the Trump administration this week. It is currently unclear whether Trump, who wants direct sales, will approve the partnership agreement. The Trump administration will ultimately make a political decision, experts say.

A statement came from the Treasury about Oracle’s taking the lead in the negotiations to integrate TikTok with an American company to eliminate the ban in the USA, which became part of the trade war that led the geopolitical-strategic struggle between Washington and Beijing.

Treasury Secretary Steven Mnuchin announced that the proposal was sent to the software giant Oracle to partner with the popular short video application TikTok of China.

They preferred Oracle to Microsoft

Speaking after TikTok’s owner ByteDance, the Chinese company, preferred Oracle to Microsoft for the partnership, Mnuchin stated that they will review the offer this week.

When Beijing has a say over the transfer of the TikTok algorithm to the foreign
The Trump administration issued a decision to ban TikTok, which has 100 million users in the US, on the grounds that it can give user data to the Chinese Communist Party (CCP) unless it is controlled by an American company. President Donald Trump set a deadline for ByteDance to transfer TikTok’s operations in the US until mid-September.

However, the bargains between ByteDance and US technology giants have evolved from direct selling to partnerships. Because the Beijing management updated the export control rules last month and had a say over the transfer of TikTok’s algorithm to the foreign buyer.

Reuters reported last week that the Beijing administration ‘agreed to close TikTok in the US rather than the forced sale’.

'It will be TikTok's secure technology provider'

Oracle announced today that they will team up with ByteDance so that TikTok can continue its operations in the USA, and that Oracle will be the secure technology provider of TikTok, according to the proposal submitted by the Chinese company to the US Treasury Department. Following the announcement, the shares of the US software giant gained 6.3 percent.

TikTok: we believe the Trump administration will address security concerns

Then, TikTok said, “We confirm that we have submitted a proposal that we believe will solve the Trump administration’s security concerns to the Treasury Department.”

'Data management of US users will be transferred to Oracle'

According to Reuters, Oracle will take over the management of TikTok’s US users’ data, in line with ByteDance’s offer. Currently, TikTok user data is stored in the Alphabet cloud with a backup in Singapore. In these operations, minority shares will also be given to ByteDance’s major investors such as General Atlantic and Sequoia.

'To ensure data security'

It is currently unclear whether Trump, who wants direct sales, will approve the partnership agreement. Mnuchin stated that they will review the deal proposal this week in his statement to CNBC, and that they should ensure that passwords, data of Americans and phones are safe, and that they will conduct talks with Oracle in the next few days with their own technical teams.

The promise of 'creating a US-based company that will create 20,000 new jobs'

The Minister of Treasury stated that they set a September 20 deadline for the approval of the agreement, and that the proposal included a commitment to create a US-based company that will provide 20,000 new jobs.

Following the advance of ByteDance-Oracle negotiations under the oversight of the Foreign Investment Commission (CFIUS) in the US, which examines the agreements for national security risks, Mnuchin stated that the Trump administration will also conduct a separate national security review. Legal experts who spoke to Reuters said that eventually the Trump administration would make a political decision.

ByteDance Has Different Companies That Have Contracted Before

It has been learned that ByteDance’s agreement with Oracle will set a precedent for CFIUS’s acquisition of US insurance company Genworth by the Chinese Oceanwide Holding two years ago.

In that deal, China Oceanwide agreed to take the service of a US-based third party to manage Genworth’s US policyholder data.

Oracle CEO Trump supporter

ByteDance goes to a similar arrangement with Oracle and expects TikTok to argue that US user data will be protected.

Oracle CEO Larry Ellison one of the rare Trump supporters in the tech world

According to Reuters / Ipsos’ survey last month, 40 percent of Americans support Trump’s threat to ban TikTok if it is not sold to the US company. While this rate rose to 69 percent in Trump’s Republican Party, only 32 percent said they knew the implementation.

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