As the TikTok Oracle deal seemed like it was getting closer to being final, the Trump administration is skeptical that the security concerns have been dealt with.
Yesterday, we updated you on where things stood with the Oracle TikTok deal. In that report, we noted that part of the deal would see a TikTok headquarters be located in the US. The deal is being described as a “partnership” rather than an outright sale of the company. One reason it is being described as a partnership is that it would see Oracle take over hosting in the US. Source code would remain with ByteDance.
As we also noted in the report, the Trump administration is demanding that tikTok be outright sold. That is not what this deal does. As a result, it raised a very legitimate question over whether or not Trump would approve of the deal. Some speculated that Trump would simply sign off on it, the deal would ultimately change nothing in terms of ownership, and all of this would be a giant nothingburger. Reports surfacing now suggest that this may not be where this story is heading. Instead, the Trump administration is reportedly expressing skepticism over the deal. From Bloomberg
Oracle Corp.’s bid for TikTok falls short of resolving concerns of Trump administration officials that the Chinese-owned video-sharing app poses a risk to U.S. national security, according to people familiar with the matter.
President Donald Trump has the authority to sign off on a deal, but continuing concerns from national security officials might sway his decision. The agreement remains on the table, with discussions continuing between administration officials and the companies, said the people, who asked not to be named because the talks are confidential.
Addressing those remaining issues could clear the way for U.S. approval, the people said. The companies are still working to make their case with the government, according to the people, and think they can still prevail.
At a press conference on Wednesday evening, Trump said he was not happy about what he was hearing about the bid, but added that he would be briefed on the details Thursday morning. “I’m not prepared to sign off on anything,” he said.
He now has four days until a self-imposed Sept. 20 deadline to decide whether to approve a proposal by TikTok’s Chinese parent ByteDance Ltd. to restructure the video app’s global operations as a new standalone company that would give Oracle and other American investors a minority stake.
Another moving part in this whole story is whether China would approve of the deal. Earlier this month, China revised its export rules. The revision ultimately means that China may have the final say on whether or not the deal would go ahead. As we noted earlier in the week, signals are coming from China that the government could veto the sale altogether. Reports we are seeing today suggest that ByteDance is also waiting for Chinese approval. From Cape Breton Post:
China will need to approve ByteDance’s proposed deal with Oracle Corp for its TikTok app, the Chinese company said on Thursday, indicating how its bid to stave off a ban in the United States could be further complicated.
Oracle has submitted a proposal to the Trump administration that will allow it to become a technology partner in the TikTok app, as ByteDance hopes to head off a Trump order that it divest TikTok’s U.S. operations.
The proposal envisages making TikTok Global a U.S.-headquartered company.
The deadline in the executive order is technically set to September 20th. That is this Sunday. Trump initially forgot the deadline and assumed it was the 15th, but the order clearly referred to the 20th. The impeached president has said that he would not extend the deadline.
With so many dramatic twists and turns, it’s pretty much impossible to tell which way this story is going to go. On some days, it seems like the deal is all but dead. On other days, the deal seems like a sure thing. We could see a last minute dramatic approval. On the other hand, we could see the deal fall through and get to sit through the Trump administration bungling its way through how to ban the social media platform. This whole story is a mess and it’s not likely going to improve any time soon.