Treasury, ByteDance, Oracle Agree To TikTok Transaction, But Trump Holds Veto Power

The U.S. Treasury Department, China’s Bytedance and Oracle Corp. (ORCL) have reached a tentative agreement on terms related to Oracle’s involvement in ByteDance’s video-sharing app TikTok.

Bloomberg reported that Treasury Secretary Steven Mnuchin sent revised terms of the deal to Bytedance late on Wednesday – which both ByteDance and Oracle accepted. The changes to the deal apparently relate to the satisfaction of the U.S. government’s concerns about national security in connection with the collection of data of the app’s American users.

White House Senior Adviser Jared Kushner is aware of the revised terms, Bloomberg noted, but it remains unclear if he is satisfied with them.

The White House had previously accused ByteDance of aggregating data on American users of the popular app and presumably sending such information to China’s Communist government – a charge ByteDance repeatedly denied.

As such, President Donald Trump issued an executive order in August that called on ByteDance to divest the U.S. operations of TikTok to an American company or he would ban the app.

While Microsoft (MSFT) was the initial front-runner in gaining TikTok, Oracle swooped in at the last minute with an offer accepted by ByteDance.

However, Bytedance will apparently retain a majority stake in TikTok – something that Trump had railed against. Consequently, Trump can still squelch the transaction – although he has close ties with Oracle executive chairman Larry Ellison.

Also under the current deal, Oracle would gain a minority stake in TikTok, while TikTok would move its global headquarters to the U.S., form an independent board of U.S. citizens approved by the U.S. government and create thousands of jobs.

TikTok’s board would also include an American data security expert who would liaise with the Committee on Foreign Investment in the U.S.

Oracle would also gain full access to TikTok’s source code and updates and would have the ability to make sure ByteDance cannot access data on U.S. users of the app – which number some 100 million people.

However, earlier on Thursday, White House Chief of Staff Mark Meadows suggested Trump might not approve the transaction.

“We’re still looking at the potential details of the deal, and whether it meets the national security thresholds, the American-interest thresholds,” he said. “My big concern is if all we’re doing is repackaging it and still keeping it as a predominantly Chinese-government run company, that would not sit well with the original goal the president outlined.”

Abishur Prakash is a geopolitical futurist at the Center for Innovating the Future, a strategy consulting firm based in Toronto. He told International Business Times that – under the current terms of the deal – this is a “win” for China.

“Bytedance doesn’t have to sell,” he said. “It’s critical technology – like artificial intelligence – doesn’t have to be handed over. It’s U.S. employees and investments are protected. And, by licensing, China has bought itself time to decouple from the U.S.”

Prakash also said it’s unclear what markets Oracle may gain control over.

“In India, [Japanese tech conglomerate] SoftBank is looking to acquire the local TikTok operations,” he said. “This may mean Oracle has control only in specific markets like the U.S. and Australia.”

Regardless of the model agreed upon for TikTok, Prakash added, the relationship between the U.S. and China has fundamentally changed.

“Chinese firms are being forced to operate under business rules no other firms are being forced [to],” he added.