Here’s where things stand with the messy TikTok dealSeptember 25, 2020
- TikTok’s deal with Oracle and Walmart is mired in confusion as the app’s parent company ByteDance and the bidders put out conflicting statements.
- ByteDance meanwhile has applied for an export license with the Chinese government.
- And a federal judge has asked the U.S. government whether it will delay an upcoming ban on video-sharing app TikTok or defend its policy in court over the weekend.
A federal judge has asked the U.S. government whether it will delay an upcoming ban on the viral video-sharing app TikTok or defend its policy in court over the weekend.
It’s the latest development in the TikTok saga which has ramped up tensions between China and the U.S. and led to a complicated and fluid deal for the social media app, owned by a Chinese parent company ByteDance.
Here’s a rundown of where we are right now in this story which is constantly changing.
Why is there a deal?
Washington maintains that TikTok, under ByteDance’s ownership, represents a national security threat because American user data could be sent back to China. This is a claim that TikTok has repeatedly denied.
On Aug. 6, U.S. President Donald Trump issued an executive order banning transactions with TikTok in 45 days. Trump has previously said the app needs to be sold or it will be banned in the U.S.
Who’s buying TikTok?
In early August, Microsoft said it was bidding to buy TikTok. Soon after, Walmart announced it was teaming up with Microsoft to buy TikTok.
Oracle later joined the fray and began talks to purchase the social media app in mid-August.
Microsoft ended its bid in mid-September, after confirming that ByteDance would not sell its U.S. TikTok operations to the American tech giant.
That announcement left Oracle and Walmart in the race for TikTok. Oracle will become the cloud provider for TikTok and will handle U.S. user data.
A new U.S.-based company called TikTok Global will be set up with Oracle holding a 12.5% stake and Walmart owning 7.5%.
The board of TikTok Global will consist of four American citizens and ByteDance founder Zhang Yiming.
This is where it gets messy.
ByteDance says that it will own 80% of TikTok Global and that company will be a subsidiary. Oracle contests that ByteDance will have “no ownership” of TikTok Global.
The concrete terms of the deal have not been made public but that will be key.
What is Beijing’s role?
Trump said this week that ByteDance “will have nothing to do with it. And if they do, we just won’t make the deal.”
Meanwhile, Beijing will likely need to green light the deal.
ByteDance has applied for an export license with the Beijing Municipal Bureau of Commerce and is awaiting a decision. It’s unclear what exactly ByteDance has applied to export given it has previously said it will not transfer technologies or algorithms to Oracle as part of any deal.
However, the Chinese technology firm did say that Oracle could inspect its source code.
In August, China updated its export restrictions list to include technologies “recommendation of personalized information services based on data analysis.” While ByteDance wasn’t named, this was seen to relate to the core recommendation algorithm that makes the app suggest videos to users.
All eyes will be on whether Beijing gives approval for this and the actual terms of the deal.
Will TikTok be banned?
TikTok was set to be banned from being distributed by U.S. app stores on Sept. 20. But as a deal got closer, that ban was delayed by a week and is set to come into effect end of the day on Sept. 27 in the U.S.
Earlier this week, TikTok sought an injunction to stop this from happening.
On Thursday, district judge Carl Nichols told the U.S. government to either delay a ban, or file their response to TikTok’s complaint by Friday afternoon U.S. time. If the latter happens, there will be a hearing on the weekend before the ban is set to come into effect.
What does China say about all this?
The Chinese government hasn’t made any explicit comments on the matter so far. However, the country’s state-backed media has.
The Global Times tabloid, often seen as close to Beijing’s thinking, accused the U.S. of “hooligan logic” in its push for certain conditions in the TikTok deal and called it “unfair.” In an opinion piece, it said it was “hard for us to believe that Beijing will approve such an agreement.”
State-backed China Daily called the deal “dirty and unfair,” adding Beijing has “no reason” to give a green light to the agreement.