Oracle Bid For TikTok May Not Satisfy Trump's Security Concerns

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ByteDance's "trusted technology partner" arrangement between TikTok and Oracle may not be enough to satisfy the Trump administration's security concerns. Speaking at a press conference on Wednesday President Donald Trump said he was not happy about what he was hearing about the bid from Oracle. He would be briefed on the details of the deal on Thursday, Bloomberg reports citing people familiar with the matter.

The agreement remains on the table waiting for the appropriate signatures. However, Washington officials are not sure if the terms do enough to address US security concerns. "I'm not prepared to sign off on anything," President Trump said.

Discussions between administration officials and the concerned companies – TikTok, its Chinese parent ByteDance, and Oracle – are still on. The companies are working to resolving any remaining issues in order to clear the way for US approval. "They think they can still prevail," the report claims sources as saying.

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Any deal with TikTok has to get US approval before the Trump-imposed deadline of September 20th. So there's just a few days remaining for the Trump administration to decide on whether to approve the Oracle bid.

Oracle bid for TikTok leaves some security concerns unaddressed

ByteDance's arrangement with Oracle will reportedly see the latter independently manage TikTok's American users' data. The company will have full access to the app's source code and updates, including the recommendation algorithm, the sale of which has been blocked by the Chinese government.

The new TikTok would operate from its new, US-based headquarters and will have a US government-approved independent board. The company will also have oversight by a third party which would report to the US government. It'll provide audits, reports, and protocols for handling any incidents that may arise in the future.

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Oracle and TikTok assure that there will be no back doors for ByteDance to access data on the app's 100 million American users. However, Trump administration officials are concerned that as long as the Chinese company wields financial control of TikTok, there's always a threat to national security.

As per the terms of the deal, ByteDance would still have the ownership of the all-important algorithms. The engineering teams that work on those algorithms will also continue to work from China, under ByteDance.

Additionally, the Chinese company would also have almost all the financial controls of the app, as Oracle will just be a minority stakeholder. At least three other shareholders in ByteDance – General Atlantic, Sequoia Capital and Coatue Management – would also have stakes in the new business structure of TikTok. Walmart is also reportedly showing interest in investing in the company.

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The proposed Oracle deal also lacks any payment to the US government. President Trump had insisted that the US treasury should get a "substantial" cut from any deal with TikTok by an American company. TikTok, however, is promising to create 20,000 new jobs in the US in hopes of winning Trump's approval.

Chinese government has yet to green flag the deal

The Oracle bid for TikTok would require approval from the Chinese government as well. ByteDance does have a close relation with the Beijing officials, though. It recently won the government's approval to acquire a company with a "coveted national digital payment license."

But Beijing's relation with the Washington counterparts is still a cause of concern. The Chinese government has vocally condemned Trump's forceful push for a full sale of TikTok.

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American lawmakers argue that the deal in its current reported form do not go far enough to address the reason why Trump demanded a full sale of TikTok's US arm to an American company. It "leaves significant unresolved national security issues."

Officials from several concerned US departments reportedly met on Wednesday to discuss on the TikTok-Oracle deal. A decision should come out any time now.