In August, Donald Trump threatened to shut down TikTok unless a sale was tendered with an American company, citing national security concerns that the video-sharing app has denied. The ban was averted on Saturday when Trump gave his blessing to a deal establishing TikTok Global, an independent entity in which software giant Oracle and Walmart will each take a minority stake in the company. Under the arrangement, Oracle will host American users’ data in the country. “It’ll be a brand new company. It will have nothing to do with any outside land, any outside country, it will have nothing to do with China,” Trump said of the deal.
Like many of Trump’s claims, however, this one appears to be a bit overblown. As CNBC reported on Monday, Chinese-owned ByteDance, TikTok’s parent company, will still hold the majority stake in the new U.S.-based TikTok company. What’s more, as Axios notes, it’s likely that ByteDance’s founder, Zhang Yiming, will sit on the new company’s board—terms that appear to undermine not only Trump’s claims, but also Secretary of State Mike Pompeo’s statements on Fox News that the entity will be “controlled by Americans” and that ByteDance will be a “passive shareholder.” As CNBC notes, he and Trump are skating by on a technicality: “because 40% of ByteDance is owned by U.S. venture capital firms, the Trump administration can technically claim TikTok Global is now majority owned by U.S. money.”
Trump has also insisted the deal put money in the coffers of the U.S. Treasury. While Oracle’s deal announcement said TikTok Global “will create more than 25,000 new jobs” in the U.S. and “pay more than 5 billion in new tax dollars to the U.S. Treasury,” Axios notes that the cut is “deferred and conditional,” with ByteDance announcing Monday that this is just a “forecast” and that any actual windfall will depend on how TikTok Global develops. “‘Make the owners sell to an American firm’ has turned into a complex transaction with plenty of Chinese involvement and a lot hanging on an IPO that might never happen,” Axios writes.
Overall, as the New York Times notes, the alleged national security threat posed by TikTok “has less to do with who owns the company and more with who writes the code and the algorithms,” the “magic sauce” that was reportedly considered up for grabs until new Chinese restrictions on the export of artificial-intelligence technology threw talks off track. In compliance with those restrictions, ByteDance said on Monday that Oracle would get to inspect the source code for TikTok, but that it will not be transferring algorithms or technology to the U.S. firm as part of the deal. “If Oracle is providing hosting with the majority of engineering and operations staying with ByteDance, then the only effect of this deal was to swing billions of dollars of cloud revenue,” Alex Stamos, who runs the Stanford Internet Observatory, told the Times. And swing it to Trump’s friends, at that.
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