For months, the fate of TikTok in the United States has been haggled over by some of the world’s largest companies, and the app’s potential sale to one of those companies has been closely scrutinized by the United States and China.
Any social-media platform with over 100 million users in the United States, in addition to millions more around the world, has an incredible ability to connect people. Yet such apps can also cause problems for liberal democracies, especially when they’re owned by a Chinese company — in TikTok’s case, ByteDance — with ties to the Chinese Communist Party.
This is the reason that, as the Committee on Foreign Investment in the United States prepared to weigh in against the backdrop of mounting public concern about TikTok, President Trump threatened to ban the app. But he quickly backed down from his threat, leaving room for TikTok’s acquisition by U.S. investors. His comments to the press last week summed up his thinking: “It’ll either be closed up, or they’ll sell it.”
In the end, it might be that neither happens. Tuesday was the deadline for ByteDance to submit an acquisition proposal to the Trump administration and thus avert triggering the executive order that bans the app. Microsoft, once seen as the leading contender to buy TikTok, announced on Sunday that ByteDance had turned down its offer. Instead, the Chinese tech company is negotiating a deal with Oracle, the software giant founded by Larry Ellison.
Multiple reports on Tuesday said that the Oracle deal presented to the Treasury Department for review did not include a total sale of TikTok. The Financial Times reports that under the arrangement negotiated by Oracle and ByteDance, TikTok would become its own entity, with global operations headquartered in the United States. Oracle and other U.S. companies that participated in the deal would get a sizeable portion of the new entity’s shares. ByteDance would retain a majority stake in TikTok, as well as control over the proprietary TikTok algorithm and other code, though some reports suggest that Oracle would have access to the algorithm.
In other words, any possibility of a U.S. company acquiring TikTok has all but disappeared.
How did we get here? ByteDance is caught between two geopolitical heavyweights. Much of the U.S. media coverage of this saga has focused on the Trump administration’s attempt to regulate TikTok, but Beijing has also shown an interest in the form that an eventual deal might take. It issued guidelines preventing the sale of certain technologies, effectively requiring ByteDance to seek approval before selling the TikTok algorithm. Because selling TikTok without the algorithm — the product’s beating heart — would have been a non-starter, those guidelines meant there could be no full sale of TikTok to U.S. investors.
Instead, under the proposed deal, Oracle would become a “trusted technology provider” for TikTok, responsible for storing U.S. user data in the United States. Is this enough? It’s certainly no better for national security than Microsoft’s abortive bid. Microsoft would have bought TikTok in its entirety, including its algorithm, which would have been subject to review by the U.S. government. From what we know about the Oracle deal, which is still under review by the Trump administration, it would make no provisions for such review. Oracle could make a difference by more credibly protecting user data than ByteDance does, and might potentially serve as an effective firewall against Chinese government requests for user data, which have been the proximate cause for American concern. But its proposal would do nothing to allay fears of ByteDance’s general subservience to the CCP.
Though ByteDance is not a state-owned enterprise, it is a Chinese company operating within China. Its vice president runs an “internal party committee” within the company, and its CEO was forced to write a public apology after one of his other apps fell short of the CCP’s ideological standards. Douyin — the Chinese version of TikTok — censors content as required by the government, and proactively cooperates with the CCP’s propaganda office to spread disinformation about the Xinjiang genocide.
TikTok’s track record of censoring and suppressing discussion of certain topics beyond China’s borders should be similarly worrying, even though it has claimed that the content-moderation guidelines that produced that censorship were outdated and incorrect. Oracle might be able to protect U.S. user data, but can it really rid TikTok of the influence the CCP exerts through ByteDance? If it can’t — and it does not seem that it can — President Trump should block the deal, allowing his TikTok ban to take effect.
There are a few reasons to think that he might not do so, all of which are political. According to Treasury Secretary Steve Mnuchin, TikTok has promised to create 20,000 jobs in the United States as part of the deal. Many of the app’s users support the president. Ellison is a Trump donor, and on Tuesday afternoon, the president called him a “terrific guy” and said that Oracle and ByteDance were “close to a deal.” But accepting the Oracle deal on Beijing’s terms could also create a political headache for Trump, undermining the “tough on China” message on which he is currently campaigning.
All that said, the political implications of the outcome should take a back seat to the national-security concerns in play, and accepting any deal short of a full sale would undermine the Trump administration’s diligent work to limit the influence of CCP-linked technology around the world. TikTok is just one app, and though it poses serious security concerns, so too do numerous other Chinese apps. Getting this right could send a powerful message to U.S. allies that are now taking a closer look at Chinese tech companies; getting it wrong would demonstrate a lack of seriousness about confronting Beijing as the CCP pursues an overhaul of global Internet standards to suit its interests. The president should consider his next moves carefully.