What is Oracle’s new deal with ByteDance and how will it affect TikTok?
TikTok isn’t being sold to Microsoft, and it looks like it’s not being sold to Oracle either. Instead, with Microsoft completely out of the loop, a new deal has been struck between Oracle and TikTok with the former coming in as a tech partner and stakeholder. What does this mean for TikTok, and what does this mean for data privacy down the line?
Who is Oracle?
Oracle is an American organisation that was one of the first tech companies of its kind, specialising in selling database technology and cloud systems to other businesses. With a secure foothold within the US government intelligence community, having completed contracts for the CIA, Navy Intelligence, Air Force Intelligence and the National Security Agency, but not only that—the company holds more of our data than let on.
The tech giant’s clients and cloud-based services have extended from it’s initial national security involvement to retailers such as the UK’s Co-op and Debenhams chains, as well as the auto-makers Mazda and Yamaha, and more. Oracle’s co-founder and current chairman Larry Ellison previously said in Jeffery Ronsen’s book The Naked Crowd that “The information about your banks, your checking balance, your savings balance, is stored in an Oracle database,” even “Your airline reservation is stored in an Oracle database. What books you bought on Amazon is stored in an Oracle database. Your profile on Yahoo! is stored in an Oracle database… Privacy is already gone.”
What has Oracle got to do with TikTok?
TikTok’s parent company ByteDance won’t be selling off TikTok’s US operations after all, with just two days before the deadline set by Microsoft, who was also on the line to take control of TikTok. Instead, Oracle won the deal to manage TikTok’s US cloud operations and data. This deal however is not structured as an outright sale, but rather as a partnership, and it is up for a review from the White House before going any further.
US officials were concerned that user information could be passed to China’s Communist Party government if the sale to Microsoft went through. TikTok, which has as many as 100 million US users, has said it would never share such data with Chinese authorities. After President Donald Trump threatened to shut the app down in the US if a deal did not go ahead, Reuters also reported that China would also rather have the app shut down in the US than allow a forced sale.
That’s why ByteDance’s latest proposal stated that the company would not sell TikTok’s operations to Oracle or Microsoft, and would not give the source code for the platform to any US firm—but Oracle would now become the firm’s technology partner and manage all of the app’s user data, and ByteDance would negotiate Oracle’s stake in TikTok’s US operations. For now, all of the video-sharing app’s current data is stored in Alphabet Inc’s cloud. Soon enough, it could be stored on Oracle’s cloud instead.
Oracle and President Trump
TikTok and Oracle have submitted a bid to the US government for the American tech company to become ByteDance’s ‘trusted technology partner’ in the US, which is an agreement finally reached after a long term battle with Trump going as far as to threaten the banning of the app. Both companies now await the outcome of their bid and according to The Wall Street Journal who first reported the proposed deal, TikTok stated that it believed the deal “would resolve the Administration’s security concerns.”
Trump wants a US tech firm to own most of TikTok in the United States, and it is unclear whether he will approve the deal. US Treasury Secretary Steven Mnuchin told CNBC on Monday the administration would review it this week, but said in the meantime that “I will just say from our standpoint, we’ll need to make sure that the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussions with Oracle over the next few days with our technical teams.”
Mnuchin also said that this proposal includes a “commitment” to bring 20,000 new jobs, along with TikTok’s headquarters to the US, as TikTok currently bases its US operations out of Beijing. However, even with its HQ being transferred to US soil, the government’s national security concerns over foreign control of Americans’ data is high, as Oracle would “assume management of TikTok’s US user data,” as reported by Reuters.
According to Business Insider, doubt was recently cast on TikTok’s US buyer’s access to the app’s renowned algorithm after the Chinese government imposed new restrictions on the export of artificial intelligence technology. If Oracle’s deal is not an outright sale as it looks to be, this issue could be inconsequential.
Oracle’s and TikTok’s future
The Committee on Foreign Investment in the United States (CFIUS), which reviews deals for national security risk, will be overseeing the ByteDance-Oracle talks and a separate review will take place with the Trump administration.
Regulatory lawyer John Kabealo, who is not involved in the talks, also commented that the “User data protection and assurances around how the company’s algorithms push content to US users are thoughtful components of a substantive solution, but whether they can change political outcomes is a much more difficult question.”
China’s foreign ministry spokesman Wang Wenbin declined to comment on Monday when asked at a press conference about the TikTok deal, but as reported by Reuters, TikTok was being “encircled” and “coerced” in the US into a transaction. “We urge the US government to provide an open, fair, just and non-discriminatory environment for foreign firms operating and investing in the United States,” he said.
Further information that was gathered by a Reuters and Ipsos national poll showed that as many as 40 per cent of Americans back Trump’s threat to ban TikTok if it is not sold to a US buyer. Among Republicans—Trump’s party—69 per cent said they supported the order, though only 32 per cent expressed familiarity with the app.
The Verge commented that Oracle has had a history of collaboration with the US government, which could make this partnership with TikTok a strategic move amid the growing undercurrent of Chinese opposition running through the White House and Congress. Department of Commerce secretary Wilbur Ross told The Verge that “the Department of Commerce is operating under a deadline of September 20,” so the future of TikTok and Oracle has just five days more to evolve on their path. The clock is ticking—bad pun intended.
