Trump Casts New Doubt On Any Deal To Keep TikTok Alive In U.S.

Mark Schiefelbein, AP

Icons for the smartphone apps TikTok and WeChat are seen on a smartphone screen in Beijing. President Trump said he does not plan to support any deal to save TikTok in the U.S. that keeps China-based ByteDance as its majority owner.

A plan to save popular video-sharing app TikTok in the U.S. is taking shape behind closed doors in Washington, though President Trump cast fresh doubt Wednesday that the deal as it stands would satisfy the White House.

The urgent talks are happening with only days to go before Trump’s executive order to shut down TikTok’s business in the U.S. will take effect.

Software company Oracle beat out a competing proposal from Microsoft to keep TikTok alive, but its offer would not be an outright acquisition. Rather, Oracle, a database and cloud storage company, says it will be TikTok’s “trusted technology partner,” a relationship yet to be clearly defined.

Trump on Wednesday told reporters that he wants to see an agreement in which ByteDance, TikTok’s Chinese parent company, loses its majority stake in the app, in order to address the administration’s data privacy and national security concerns.

“Conceptually, I can tell you, I don’t like that,” Trump said of Beijing-based ByteDance’s majority ownership. “If that’s the case, I’m not going to be happy with that.”

The president’s insistence that ByteDance forfeit its majority ownership comes in the face of multiple reports indicating that ByteDance is demanding it retain its ownership position in the app, which has more than 700 million monthly active users.

Trump said his next briefing on the future of TikTok is Thursday.

The president, who had floated the idea that the U.S. Treasury should get a cut of whatever TikTok deal the U.S. approves, acknowledged to reporters that he has been informed that “there’s no legal path to doing that.”

What we know about the Oracle proposal

Much is still unknown about the Oracle partnership. Experts say it likely involves Oracle having the ability to audit how TikTok servers house data the app collects and ensuring there are no loopholes that would allow China to get its hands on the data of U.S. users.

Weifeng Zhong, a senior research fellow on China issues at George Mason University’s Mercatus Center, said if the plan to revamp TikTok gives its parent company, ByteDance, the ability to overrule Oracle, then the arrangement would do nothing to protect national security.

“The ball is now really in the court of the administration,” Zhong said in an interview with NPR. “But if Oracle doesn’t have the final say, I would be very skeptical about this deal.”

Treasury Secretary Steven Mnuchin said on CNBC that TikTok has offered to locate its global headquarters in the U.S. and add tens of thousands of jobs in a bid to appease the Trump administration.

TikTok’s U.S. operation is based in Culver City, Calif., in the Los Angeles area.

How Trump’s crackdown affects a potential Oracle deal

Trump’s August executive order prohibiting “any transaction” between U.S. citizens and ByteDance takes effect Sunday.

The Commerce Department has still not defined transactions affected by the order, but the Trump administration did say in a legal filing this week that it does not intend to deprive TikTok employees or contractors of any income or wages.

In a second executive order from the president, TikTok must sell all of its U.S. assets to an American company or group of U.S. investors by Nov. 12.

Both of these White House actions could undercut any potential deal with Oracle, according to national security experts.

“A U.S. operation buying stakes off of TikTok would in itself be a transaction, so I see some conflicts there,” said Zhong of the Mercatus Center.

Former Treasury Department lawyer Aimen Mir said any agreement hinges on changes to the president’s orders.

Mir served as staff chairperson of the Committee on Foreign Investment in the United States (CFIUS) during the Obama administration, the interagency panel that recommended to the president that TikTok be forced to divest in the U.S. by mid-November.

“If the Oracle deal as proposed by the parties is acceptable by the government, one would expect the orders would be modified or rescinded to allow that transaction to proceed,” Mir said.

Mir said in an interview with NPR that the president approving a deal that the CFIUS did not is “unusual,” but he added: “It’s clearly within the powers of the president to modify his order.”

Opposition to Oracle builds among Republicans

Microsoft, one of the most valuable companies in the world, owns Xbox and LinkedIn and was seen as the likely buyer for TikTok, but China intervened in the midst of negotiations and passed a new rule placing restrictions on how TikTok’s all-important algorithm could be exported. Shortly after that, talks with Microsoft fell apart.

That’s when Oracle, a tech stalwart that has never had a major consumer product, became the leading bidder.

Resistance to Oracle’s arrangement with TikTok among Republicans in Congress is mounting.

Six Senate Republicans issued a letter to Trump on Wednesday criticizing the proposed Oracle partnership, since it does not involve an American company fully taking over TikTok’s U.S. operations.

“Any deal between an American company and ByteDance must ensure that TikTok’s U.S. operations, data, and algorithms are entirely outside the control of ByteDance or any Chinese-state directed actors, including any entity that can be compelled by Chinese law to turn over or access U.S. consumer data,” wrote Sens. Marco Rubio, Thom Tillis and others.

“As reported, the proposed partnership agreement between Oracle and TikTok leaves significant unresolved national security issues, and we expect the Administration to keep Congress fully informed as you evaluate this potential agreement,” the Republican Senators wrote.

Oracle’s ties to President Trump

Also drawing attention is Oracle’s connection to the president. Oracle chief executive Safra Catz served on the president’s transition team after the 2016 election. And Oracle co-founder, Larry Ellison, held a fundraiser for Trump in February at his Rancho Mirage, Calif., estate, prompting hundreds of employees to stage a walkout in protest.

Ellison is among the few technology executives in Silicon Valley to champion the president.

Trump last month called Ellison “a tremendous person” and Oracle a “great company,” but it remains unclear whether Trump’s support of Ellison factored into ByteDance picking Oracle’s offer over competitor Microsoft.

TikTok, the viral video app that boasts some 100 million American users, has become the latest target in Trump’s trade war with China.

Officials in the White House fear China’s authoritarian regime could access Americans’ data through the app and use the information to blackmail or launch disinformation campaigns.

TikTok has long downplayed such worries, pointing out that U.S. user data is stored mostly in Virginia and that moderators for its U.S. operations are directed by an American-led team. According to TikTok, Beijing authorities have never sought Americans’ information.

In an effort to ease U.S. national security and privacy concerns, TikTok has opened up its source code data for experts and journalists to review and claims Trump’s crackdown on the app is driven by politics more than concerns over national security.

TikTok is facing a class-action lawsuit over allegedly stealing data on American children without consent and sending it to servers in China.

Zhong from the Mercator Center said China has a poor track record in keeping promises to foreign countries about the protection of user data. He said given TikTok’s immense U.S. user base, a national security review is warranted, but Oracle’s deal may not meaningfully address those concerns.

“If the Administration turns down this proposal, it’d better be because it fails to adequately protect user data,” Zhong said.

Copyright 2020 NPR. To see more, visit https://www.npr.org.