October 29, 2020

‘There’s No There There’: What the TikTok Deal Achieved

Oracle and Walmart would own a cumulative 20 percent stake in TikTok Global, which said it planned to hire 25,000 people in the United States over an undisclosed period and go public sometime in the next year. TikTok also promised to pay $5 billion in “new tax dollars to the U.S. Treasury” and create “an educational initiative to develop and deliver an A.I.-driven online video curriculum,” according to a joint announcement from Oracle and Walmart.

President Trump pronounced the agreement a success and blessed it, saying on Saturday that TikTok would “have nothing to do with China, it’ll be totally secure, that’s part of the deal.” And he was partly right: The deal puts more control of TikTok into the hands of Americans, with four of the five members of the new entity’s board being American. Oracle would also oversee the app and could verify the security of TikTok’s code and any updates.

But the agreement does not deliver on Mr. Trump’s original demand of a full sale of TikTok and it does not eliminate China from the mix. Under the initial terms, ByteDance still controls 80 percent of TikTok Global, two people with knowledge of the situation have said, though details may change. ByteDance’s chief executive, Zhang Yiming, will also be on the company’s board of directors, said a third person. And the government did not provide specifics about how the deal would answer its security concerns about TikTok.

Even the $5 billion that Mr. Trump trumpeted was mired in confusion. The education initiative associated with the agreement was lumped together with the $5 billion in “new tax dollars,” even though they are separate. No further details were publicly given on how the money would be provided. ByteDance said in a Sunday statement posted to its news aggregator app that it had been previously unaware of the contribution.

Lawmakers, policy specialists and others said the way that TikTok’s deal got done also deserved more scrutiny. That’s because Mr. Trump first forced TikTok into a corner with an executive order on Aug. 6, in which he threatened to block the app in the United States if it did not satisfy national security concerns. He then approved the deal only after Oracle — which has a cozy relationship with the White House — got involved. At different points, Mr. Trump also said the government deserved a cut of any deal.

Article source: https://www.nytimes.com/2020/09/20/technology/tiktok-trump-victory.html

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