ByteDance will not be selling TikTok in the US and is in search of a deal with tech company Oracle that it hopes would spare it a ban in the country while appeasing the Chinese government, says sources.
The Chinese firm was in negotiations to sell the US operations of TikTok to either Oracle or Microsoft, who is in a partnership with Walmart, after the United States President Donald Trump ordered it to sell or face shutdown last month.
Although TikTok is best known for its short videos of, mostly, teenagers, the US officials expressed concern that user information collected through the app might be transferred to the communist government of China. TikTok has denied the allegation.
Meanwhile, China had revised its export control rules at the end of last month to give it a say about the transfer of the TikTok algorithm to a foreign buyer and this had upended the deal for ByteDance. It was earlier reported that the government of China would rather see TikTokshut down in the US than allow it to be forced to sell.
Deal with Oracle
The proposed deal would make Oracle the technology partner of ByteDance and take over the management of TikTok’s user data in the US, according to the sources. Further, Oracle is negotiating to take a share in the US operations of TikTok, they said.
One of the sources reported that some of ByteDance’s top investors, including General Atlantic and Sequoia, would also receive minority stakes in TikTok’s US operations.
It’s uncertain if the proposed agreement will be accepted by Trump, who mandated that a US technology firm should take majority control of TikTok in the country. The United States Foreign Investment Committee (CFIUS) is overseeing the talks between ByteDance and Oracle. CFIUS is the US government panel which reviews possible national security risks.
Oracle’s chairman Larry Ellison is one of Trump’s few allies in the technology community. The corporation has considerable technical expertise in data processing and data security but little social media experience. Its clients include companies, rather than customers. User data for TikTok is currently stored in the GOOGL.O cloud of Google owner Alphabet Inc.
Microsoft said it was told by ByteDance earlier on Sunday that it would not be selling its US operations of TikTok.
Retail giant Walmart, which joined Microsoft in its bid, said that it continued to have an interest in a TikTok venture, and that it would have more discussions with the leadership of ByteDance and other stakeholders.
Worsening US-China relation
As US-China ties deteriorate over trade, Hong Kong’s sovereignty, cyber-security and the spread of the novel coronavirus, TikTok has emerged as a flash point in the rivalry between the two largest economies in the world.
Last month Trump signed two executive orders aimed at TikTok and ByteDance. The first forbids US firms from dealing with them and is expected to take effect from September 20. The second requires ByteDance, due to US security issues, to sell TikTok by 12th November.
The US has stepped up its efforts to remove from US digital networks what it finds to be “untrusted” Chinese apps. In addition to TikTok, Trump has also released an order that would bar transactions with the WeChat messenger app from Tencent Holding Ltd.
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