Donald Trump is forcing the sale of TikTok to an American buyer. An American company must own the app and technology it uses—including its data collection—to appease Trump’s demands for privacy and security in the app. Microsoft was stringent about this, and willing to pay top dollar for the company. Then China’s government threw a wrench into the plans. Now ByteDance couldn’t sell TikTok’s technology without China’s permission, something they wouldn’t likely give up. However, Oracle had a better deal. China gets to keep the algorithm, data, and everything else they wanted TikTok for. Oracle just becomes a U.S. partner. The technology remains in China. The name on the door still says TikTok. But Oracle takes a piece of the operations in the U.S.
This doesn’t seem to comply with Trump’s order. It’s not a complete sale to a U.S. company. However, Oracle has an ace up its sleeve. Oracle’s co-founder and executive chairman, Larry Ellison, is a Trump supporter. Ellison held a fundraiser for Trump’s reelection earlier this year. That might have been enough to (literally) buy Trump’s favor. One of Trump’s biggest gripes about TikTok likely was its anti-Trump leaning. For Trump, this is the perfect outcome. TikTok, the most youthful and left-leaning social network, will be in the hands of a Trump supporter in the United States.
I wouldn’t blame you if you thought it sounds like Trump used an executive order to attack a social network for political gain, and now benefits from that fallout.
Trump still has to indicate whether or not Oracle’s lessened efforts—which won’t improve security or privacy—will be enough to satisfy the stipulations in his executive order. It doesn’t seam like they will, but that may not matter.
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ByteDance Holds On to Code
Due to China’s new law, ByteDance knew it couldn’t give up the source code for TikTok. They knew they couldn’t sell off the data collection and analysis portions of the company. That’s data collection and machine learning that China wants to retain. However, it’s that very data collection that Trump claims he had a problem with. Oracle seemed to be at an impasse. They had to sell off their data colleciton to appease Trump and remain in the United States, but China wouldn’t allow that. TikTok would rather lose business in the U.S. than its connection to China, so it seemed like they’d call off all deals and let the ban come.
As companies dropped out of dealings, with few left in the running, this seemed to be the only option ByteDance had left.
Microsoft Drops Out
Microsoft announced late yesterday that they would not continue to pursue TikTok. This was TikTok’s decision. Microsoft reiterated their focus was on national security and privacy, and promised to make large changes to TikTok to improve security and privacy, as well as combat disinformation. These measures would have made TikTok a service worth using. However, ByteDance didn’t want TikTok to change. They wanted to retain their rights to data collection, as China has demanded. They also likely wanted to continue their censorship, which targets anyone China doesn’t seem to like. None of this would have been possible under Microsoft.
“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting [sic] disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”
As such, TikTok left Microsoft’s offer behind, and went for someone who may not have as strict measures in mind, someone who didn’t want TikTok for to improve security or privacy. Someone who wouldn’t mind the spread of disinformation.
Oracle Asks for Less
Microsoft wanted to improve TikTok. They wanted to follow the executive order and ensure TikTok was entirely in U.S. hands, was secure, private, and didn’t contribute to misinformation campaigns.
Oracle wanted a bit less.
Oracle, it seems, still wants the TikTok app, even without ByteDance’s special sauce. Without the data collection and analytics, the app wouldn’t be what it used to be. However, if Oracle could outsource that machine learning to ByteDance, keeping only the TikTok operations, client, or just the name, they’d be able to profit from the deal.
The problem with this is the fact that it doesn’t really do what Trump says he wanted. It leaves data collection and analytics in China. If anyone but a Trump donor attempted this, it would never pass. However, thanks to Oracle’s donations to Trump’s campaign, the deal actually has a chance.
Scraping the Bottom
Few companies have as bad of a reputation in Silicon Valley as Oracle. The company changed the license on Java, making it expensive and complicated for developers. As a result, Kotlin exploded in popularity, and much of Android has been moving off of what was once one of the most popular programming languages.
Oracle has also been fined and investigated for bribery and corruption all over the world, from India to Romania to West and Central African nations. For many, Oracle has a reputation for less than reputable dealing.
Now they’re buying a company and may get the thumbs up from Trump despite not meeting the conditions he laid out. That could be because the company’s co-founder held a large fundraiser for Trump. Elsewhere in the world, that might be called bribery. In the United States, it’s just another Monday.
Trump and China Win
Trump’s pesky social network with anti-Trump memes will be under the control of a Trump supporter. It’ll appear as though he was tough on China when really China will be getting their way as well. The Chinese government won’t have to give up ByteDance’s technology that powers TikTok, and will be able to continue their data collection.
All it took was the right company buying TikTok, or, rather, taking over the U.S. operations of the still Chinese owned and operated app. That company just so happened to be largely controlled by an infamous Trump supporter. Nothing to see here, folks, move along, this deal’s done.
Sources:
- Wesley Hilliard, AppleInsider
- Natash Mascarenhas, Rita Lioa, TechCrunch
- Ivan Mehta, The Next Web
- Microsoft
- Malcolm Owen, AppleInsider
- Dan Primack, Axios
- Eric Savitz, Barron’s
- Jody Serrano, Gizmodo
- Tom Warren and Nick Statt, The Verge
- Dana Wollman, Engadget