Oracle’s bid to purchase TikTok, in conjunction with Walmart, is on hold indefinitely as a result of the change in administration.
The Trump administration aggressively went after a number of Chinese companies, including Huawei, ZTE, Xiaomi and TikTok, accusing them of being a threat to national security. The administration instituted bans against the first three, and was in the process of banning TikTok unless it could arrange for a US buyer to take over its operations.
Oracle emerged as the winning candidate, along with help from Walmart, but the deal got caught up in red tape and disputesover how much control Oracle would actually have. Ultimately, even TikTok was left wondering about its fate, with a judge effectively granting it a stay of execution in the form a temporary injunction against the ban The judge also questioned whether the administration had the authority to ban the app in the first place.
The Biden administration is currently reviewing the previous administration’s actions regarding various Chinese companies, and that has put the Oracle/TikTok deal in limbo.
According to The Wall Street Journal, the Biden administration has asked to a delay an appeal against the injunction while it reviews the situation to see if the Trump administration’s actions were warranted.
Needless to say, TikTok would no doubt prefer to remain independent. As a result, if there is a chance the current administration will abandon efforts to ban the app unless its purchased by a US company, there’s no incentive for talks to continue until the Biden administration reaches a conclusion.
TikTok has announced a number of changes aimed at improving privacy protections for children on its platform.
TikTok has come under widespread criticism for privacy and security violations. Not the least of those has been repeated violations of child privacy. The company’s ongoing security and privacy issues have prompted numerous companies and government agencies to restrict the app from company devices, as well as been a major factor in the US government attempting to ban the app.
While TikTok’s future remains in question, the company has finally taken definitive steps to protect children using its platform.
“Starting today, we’re changing the default privacy setting for all registered accounts ages 13-15 to private. With a private TikTok account, only someone who the user approves as a follower can view their videos. We want our younger users to be able to make informed choices about what and with whom they choose to share, which includes whether they want to open their account to public views. By engaging them early in their privacy journey, we can enable them to make more deliberate decisions about their online privacy.”
The company has included additional changes, such as restricting comments on videos created by younger users, modifying Duet and Stitch settings for these groups, restricting friend suggestions and more. In addition, the company also offers a TikTok for Younger Users, specifically for users in the US under 13 years of age.
TikTok’s announcement is a welcome improvement. It remains to be seen if it will do anything to help the company’s fight against its ban order.
The Trump administration is moving to ban additional Chinese apps, with President trump signing an executive order targeting eight.
Trump previously banned TikTok, as well as WeChat, citing national security and privacy concerns. He has now signed an executive order banning Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay and WPS Office, according to The New York Times.
“The United States has assessed that a number of Chinese connected software applications automatically capture vast swaths of information from millions of users in the United States, including sensitive personally identifiable information and private information,” the order said. “At this time, action must be taken to address the threat posed by these Chinese connected software applications.”
The order is not set to go into effect until 45 days from now, well into the Biden administration, casting doubt on whether it will be implemented. With one judge already saying the government “likely overstepped” in its TikTok ban, it’s even more unlikely these new bans will ever see the light of day.
In the latest twist of the never-ending saga, the US government is appealing an injunction against its TikTok ban.
The US government has been working to ban TikTok for some time. The Trump administration has accused TikTok of being a security threat, and made it clear that only a sale to an American company would prevent an outright ban. Oracle, with Walmart joining it, emerged as the winning bidder. Per the terms of the deal, however, Oracle would only gain a 20% stake in the company. Meanwhile, China signaled it would oppose a deal it felt was unfavorable to the country’s image.
Meanwhile, TikTok was left in limbo as it tried to work out a deal with the US government as the deadline approached. The company won an injunction, with at least one judge even questioning if the ban was legally viable.
Not willing to give up the fight, the US government is now appealing the injunction, according to Reuters. The Justice Department is bringing the case before the U.S. Court of Appeals for the District of Columbia.
Given that Judge Carl Nichols — when granting the injunction — said the government had “likely overstepped” in its decision to ban TikTok, this case could redefine the limits of the government’s authority.
TikTok has experienced another embarrassing privacy issue, with the revelation it is sending the personal data of job applicants to China.
TikTok was on the receiving end of ire from the US over its privacy practices and the perception it represents a threat to national security. The company even faced a lawsuit by an individual claiming the platform was sending photos and videos to Chinese servers without her permission, even without her signing up for an account.
The company has gone to great lengths to distance itself from those accusations, and tried to prove its independence from its owner, Chinese company ByteDance.
According to Business Insider, however, the company was routing personal information from job applications through servers in China. What’s worse, the data was “potentially highly sensitive, with the firm’s own policies stating that it collects medical data; sex and race data; marital status; geolocation data, among many other categories.” Adding to the issue, TikTok did not inform applicant’s their data would be routed through China.
After Business Insider approached TikTok, the company said it will end the practice. Nonetheless, this is an embarrassing lapse for company that seems to go from one embarrassingprivacy and security incident to another.
The Federal Trade Commission (FTC) has issued orders to nine social media and video platforms, inquiring about their data practices.
Big Tech is under more scrutiny than ever before, and privacy is a big focal point. Data breaches and mishandling of consumer data in recent years has resulted in individuals and officials being more privacy-conscious. As a result, there have been some instances of groundbreaking legislations, such as the EU’s GDPR and California’s CCPA/CPRA.
It appears the FTC is increasing its own scrutiny of companies’ data practices, with an order to “Amazon.com, Inc., ByteDance Ltd., which operates the short video service TikTok, Discord Inc., Facebook, Inc., Reddit, Inc., Snap Inc., Twitter, Inc., WhatsApp Inc., and YouTube LLC.”
The FTC is specifically looking to understand how these platforms “collect, use, track, estimate, or derive personal and demographic information.” In addition, the FTC wants to know how these platforms determine which ads and content are shown to users, how they handle user engagement and how children and teens are impacted.
Some companies, such as Apple, Microsoft and Mozilla, have taken strong stands on privacy. The platforms covered by the FTC’s order, however, have based much of their business on collecting user information. In many cases, there has been a lack of transparency about what data is collected and how it is used.
Hopefully the FTC’s inquiry is the first step toward stronger data protections for consumers.
The deadline for ByteDance to complete the sale of TikTok has come and gone, but a judge has blocked the ban, giving the company more time.
The Trump administration labeled TikTok a security and privacy threat, threatening to ban it unless ByteDance sold its US operations to an American company. A date was set for the ban, although Oracle—partnered with Walmart—quickly emerged as the buyer.
The deal almost immediately ran into issues, however, as Oracle was only buying a 20% stake in the company, not the full ownership Trump had wanted. At the same time, China changed its export rules to block selling what it deemed sensitive technology, including the algorithm that forms the backbone of the social media platform.
To make matters worse, TikTok accused the government of not communicating with it, despite repeated attempts to meet the administration’s demands. This led the Commerce Department to signal it would not move to enforce the ban immediately.
Now a judge has stepped in to ensure TikTok’s ban won’t go into effect. According to CNET, District Judge Carl Nichols said the government had “likely overstepped” its authority in its attempts to ban TikTok.
While the Commerce Department said it will cooperate with the judge’s order, it is now saying it will “vigorously defend” the ban.
The US Commerce Department has signaled it will not enforce the order to shutdown and ban TikTok.
The Trump administration has been trying to force Chinese-owned TikTok to offload the American portion of its business to an American company. Oracle, partnering with Walmart, emerged as the leading candidate, although the terms of the deal were not what Trump had stipulated.
Rather than taking full ownership, the terms of the deal stipulated that Oracle would take a 20% stake. In the meantime, China indicated it may not approve the deal as it doesn’t want to be seen as weak, giving up one of its star companies.
As the involved parties continued to negotiate, however, TikTok filed with a US court of appeal to have the order forcing a sale overturned. The company cited the extraordinary efforts it had gone through to comply, only to hear radio silence from the Trump administration.
Now the Commerce Department has said “it wouldn’t enforce its order that would have effectively forced the Chinese-owned TikTok video-sharing app to shut down, in the latest sign of trouble for the Trump administration’s efforts to turn it into a U.S. company,” according to The Wall Street Journal.
It remains to be seen how the TikTok saga will ultimately turn out, and what impact a Biden presidency could have on the deal.
Wondering what’s going on with TikTok’s ban? Evidently, so is TikTok, as the company’s future has been left in limbo.
TikTok dominated the news for weeks as the Trump administration tried to force the social media platform to sell to an American company under threat of ban. Trump eventually issued an executive order banning the company, although a court ruling delayed it from going into effect.
In the meantime, Oracle and Walmart together emerged as prospective buyers, although not the way Trump had envisioned. While Trump had said the social media company would be under control of an American company, and free from Chinese control, the initial deal Oracle struck was for a 20% stake in the company, with control firmly in China’s hands.
Further exacerbating the situation was a ruling by the Chinese government blocking the export of certain technology, including the algorithm TikTok uses, putting the deal in further doubt. Chinese state media also claimed the government would not approve the deal, saying that to do so “would endanger China’s national security, interests and dignity.”
Now, with the deadline for working out a deal coming to an end, TikTok wants to know what’s going on.
“For a year, TikTok has actively engaged with CFIUS in good faith to address its national security concerns, even as we disagree with its assessment,” TikTok says in a statement to The Verge. “In the nearly two months since the President gave his preliminary approval to our proposal to satisfy those concerns, we have offered detailed solutions to finalize that agreement – but have received no substantive feedback on our extensive data privacy and security framework.”
In the meantime, the company has filed with a US court of appeals to have the divestment order overturned.
Gary Vaynerchuk, CEO of Vayner Media, social media star and entrepreneurial guru followed by millions, says you can’t even find a 24-year-old on Facebook today:
I Don’t Believe TikTok Is A National Security Threat
A federal judge has blocked the Trump administration’s ban on TikTok, at least temporarily, giving the social media platform a reprieve.
The Trump administration has been trying to ban TikTok, calling the platform a security and privacy threat. The move is widely seen as part of the administration’s trade war with China and its broader attempt to isolate Chinese companies, such as TikTok, WeChat, Huawei and ZTE.
One of the conditions that could have prevented a ban was if TikTok’s parent, ByteDance, agreed to sell TikTok’s US operations to an American company. An initial deal was struck, with Oracle slated to take a 20% ownership stake. While the Trump administration signed off on the deal, the Chinese government did not, leaving a ban on the table.
Now, according to Forbes, “Pennsylvania Judge Wendy Beetlestone blocked that order Friday, issuing a preliminary injunction while the court considers a lawsuit brought by several TikTok content creators.” Judge Beetlestone questioned whether Trump has the authority to unilaterally ban TikTok.
The eventual outcome of the TikTok drama could have far-reaching implications for internet companies all over the world, with many experts warning about the nationalization of the internet.
The US-China trade war has escalated as China sanctions multiple companies in retaliation for weapons sales to Taiwan.
The US and China have been locked in a trade war, with each side taking shots at the other. The US has banned ZTE and Huawei, and urged its allies to do the same. The administration altered the Entity List and Foreign Direct Product Rule to cut Huawei from any chip suppliers that use US technology, including TSCM, one of its prime suppliers. The Trump administration is also pushing for a ban of WeChat and TikTok.
In response, China passed new regulations limiting the technologies that could be exported. In particular, the new regulations target the algorithm TikTok uses, thereby putting in jeopardy any deal that might avert a US ban by selling TikTok’s US operations to another company.
Now China has gone even further, sanctioning Lockheed Martin, Boeing Defense, Space & Security (BDS) and Raytheon over weapons sales to Taiwan.
“As China pointed out on multiple occasions, the U.S. arms sales to Taiwan severely violate the one-China principle and the three China-U.S. joint communiqués, and seriously undermine China’s sovereignty and security interests,” said Foreign Ministry Spokesperson Zhao Lijian in a press conference. “China firmly opposes and strongly condemns it.
“To uphold national interests, China decides to take necessary measures to sanction U.S. companies involved in the arms sales to Taiwan including Lockheed Martin, Boeing Defense, Space & Security (BDS) and Raytheon, as well as the U.S. individuals and entities who played an egregious role in the process.”
It’s unclear what long-term impact the sanction’s will have on the US companies. In the short term, the news caused a sharp sell-off of those specific stocks, dragging down industrial stocks in general Monday.
China has fired the latest shot in the ongoing trade war with the US, passing legislation to restrict exports of sensitive technology.
The US has been working to isolate Chinese firms it deems as a threat to privacy and security. Huawei and ZTE have both been banned, with US officials pressuring allies to do the same. The US has also used export controls to cut Huawei off from its chipmaking suppliers, such as TSMC. The Trump administration also threatened to ban TikTok, unless the social media app was sold to a non-Chinese company.
In retaliation, China threatened to block the sale of specific technologies, including the algorithm that is at the heart of how TikTok functions. Now, according to Bloomberg, the National People’s Congress Standing Committee has passed a law prohibiting the export of sensitive technology, including by companies that have foreign investors. The law goes into effect on December 1.
It remains to be seen how widespread the impact will be, as there is very little information available about the law’s reach. We will continue to monitor and update as the story develops.
TikTok has won its latest round against the Trump administration, getting a temporary injunction against the administration’s looming ban.
A ban that would have stopped individuals from downloading TikTok in the US was set to go into effect Sunday at 11:59 PM. TikTok filed for an injunction to prevent that from happening, with a judge granting it with only hours to spare.
TikTok has been at the center of ongoing drama as US officials have accused it of being a national security threat. The US has been pushing for a deal that would see US operations taken over by a company not under Chinese control. While Oracle, in conjunction with Walmart, were able to come to terms with TikTok’s parent ByteDance, it remains to be seen if the deal will receive final approval.
ByteDance has stated that majority ownership and board control will remain China-based. China has also taken issue with the US trying to force a sale of TikTok. Any of these factors could ultimately derail existing plans.
In the short term, however, it appears TikTok has received a new, albeit it temporary, lease on life.
The Trump administration is considering imposing export restrictions on China’s biggest chip maker, SMIC.
The US has been increasingly targeting Chinese companies, including Huawei, ZTE, TikTok and WeChat, citing national security concerns. Huawei and ZTE have been banned in the US, with TikTok and WeChat facing imminent bans.
As the trade war heats up, it appears US officials are not slowing down. SMIC is China’s biggest chipmaker, and it appears it is coming under increased scrutiny. According to CNBC, the Department of Defense is analyzing whether it should be placed on the Entity List, a step that would make further restrictions much easier.
“DoD is currently working with the interagency in assessing available information to determine if SMIC’s actions warrant adding them to the Department of Commerce’s Entity List,” said a DoD spokesperson. “Such an action would ensure that all exports to SMIC would undergo a more comprehensive review.”
Should the US proceed with this step, it remains to be seen what retaliatory measures the Chinese government may take.
“The whole thing is a crock,” says legendary internet mogul Barry Diller. “It starts, obviously, simply to say we want to protect the security of Americans from anything that could happen to them by using TikTok. It has now morphed into this kind of ludicrous game match between tossing ownership here, control there, etc. Its original aims are out the window and in has just come a whole political mismatch. The whole thing has been stirred up for no great good reason.”
Barry Diller, Chairman and Senior Executive of IAC/InterActiveCorp and Expedia Group, says the entire TikTok deal is a crock:
It’s no deal. I don’t know that it means much of anything at the moment. The whole thing is a crock. It starts, obviously, simply to say we want to protect the security of Americans from anything that could happen to them by using TikTok. It has now morphed into this kind of ludicrous game match between tossing ownership here, control there, etc. Its original aims are out the window and in has just come a whole political mismatch. I have no idea how it settles. I also think it’s relatively endless. The whole thing has been stirred up for no great good reason.
Once you start tossing this grenade about protectionism and once you start turning these things into political questions vis-a-vis China… I’m not saying that China treats fairly. I’m not saying that we shouldn’t have policies quote against in terms of competition and all of that and not stealing property and all of those things. However, once you say we won’t do this because of you the reciprocal out of that is going to be just as bad. Once you start it it’s inevitable that that race just keeps going up and up and up and prevents just natural commerce.
China state-affiliated media says that the Chinese government will not approve the current TikTok deal with Oracle and Walmart. The editor of a communist party paper, Global Times, tweeted this:
Based on what I know, Beijing won’t approve current agreement between ByteDance, TikTok’s parent company, and Oracle, Walmart, because the agreement would endanger China’s national security, interests and dignity.
Based on what I know, Beijing won't approve current agreement between ByteDance, TikTok's parent company, and Oracle, Walmart, because the agreement would endanger China's national security, interests and dignity.
For instance, American citizens will take up four of the five board seats for TikTok Global and only one can be Chinese. The board of TikTok Global would include a national security director, who will have to be approved by the US.
Oracle will have the authority to check the source code of TikTok USA and updates. As the TikTok and Douyin should have the same source code, this means the US can get to know the operations of Douyin, the Chinese version of TikTok
TikTok Global will control the business of TikTok around the world except China. It will block IP from the Chinese mainland to access it. This means the Americans can take control of the global business of TikTok and reject Chinese to access it.
Source: Global Times
The Global Times editor says that “the US suppresses it with all its national strength and forces it to sign a deal under coercion.” The editor added that “China, also a major country, will not yield to US intimidation and will not accept an unequal treaty that targets Chinese companies.”
“Given the amount of content on that channel with the amount of marketing that’s being spent to drive more users there’s a virality that is driving this asset to be worth over a period of time $100 to $200 billion,” says Wall Street Analyst Alex Zukin. “That’s why we think that for Oracle to invest at a $7.5 billion stake for a company potentially worth $60 billion today (and $200 billion later) could be compelling and add value to the share price.”
Alex Zukin, RBC Capital Markets, discusses why Oracle investing in TikTok is a real opportunity of the company to change the narrative and be relevant and exciting:
It does appear to us the Oracle has a real opportunity to change the narrative for the company. A narrative that has to do with growth, that has to do with cloud, that has to do with being relevant and exciting again. That is a really interesting opportunity again to add shareholder value.
Oracle is a fiesty competitor. Never underestimate Larry Ellison if he wants to get into a market. It started with the announcement that Zoom is a customer earlier this year. That was a big deal. That was really their first highly relevant actionable customer win that stood out to us. They are compounding their gains if they are able to successfully add TikTok.
When Oracle is looking for opportunities to change the narrative the fact that it is looking at this rather than potentially large scale M&A suggests that the valuation environment may not be one that supports that type of path right now. This is definitely an innovative construct to change the relevant narrative for the company.
The data indicates that the kind of engagement that this app is driving is not just unique but in the history of applications in internet software difficult to replicate. The amount of people that spend more than ten minutes, more than 30 minutes, or more than an hour engaging is very different than most established apps. Not just the amount of people that are engaging but the amount of time and the amount of people that are engaging over a certain amount of time.
It’s always possible that these types of things can be replicated with enough investment over a big piece of time. But the truth is right now given the amount of content on that channel with the amount of marketing that’s being spent to drive more users there’s a virality that is driving this asset to be worth over a period of time $100 to $200 billion. That’s why we think that for Oracle to invest at a $7.5 billion stake for a company potentially worth $60 billion today could be compelling and add value to the share price.
TikTok Deal: ‘Virality Driving This Asset To Be Worth $200 Billion’
The deal to keep TikTok running in the US is headed for another impasse over control of the new company.
According to TheStreet, TikTok Global will be a new company created to handle operations outside of China. Oracle, along with Walmart, will take a 20% stake in the company. This is a big win for Walmart, as they originally had tried to partner with Microsoft in their failed bid. TikTok’s CEO was insulted by Microsoft describing the social media platform as a security risk, torpedoing Microsoft’s involvement in the company’s future. Walmart, however, was able to avoid the fallout and jump onboard with Oracle’s successful bid.
Unfortunately for the companies involved, there appears to be some disagreement about who will have majority ownership. President Trump had claimed that TikTok’s ownership would “have nothing to do with any outside land, any outside country. It will have nothing to do with China.”
ByteDance, on the other hand, has said TikTok Global’s technology, majority ownership and the bulk of its executive board would be based in China. According to International Business Times, however, Trump has vowed to block any deal that leaves the new company under Chinese control.
It remains to be seen if the involved parties will be able to work out a resolution.
The Financial Times reports that under Oracle’s proposal currently under review by various entities within the US government including Treasury and Homeland Security, TikTok is set to become a standalone US company to satisfy White House conditions. The agreement would keep ByteDance as majority shareholding, with Oracle holding a minority stake. This condition would seem to be at odds with Trump’s mandate for TikTok to become an American owned company to satisfy the terms of his executive order designed to protect the privacy and security of the American public.
However, President Trump told reporters today that he heard that Oracle and TikTok are “very close to a deal.” He said that a decision on the pending deal will be made “pretty soon.” He noted that he has “high respect” Oracle Chairman Larry Ellison. Ellison is a well-known supporter of President Trump. The trust that the President has with Ellison is likely key to making this deal happen.
CNBC’s Jim Cramer who has both tech world sources and is friends with Treasury Secretary Steve Mnuchin said this today:
I think there’s a deal as soon as today. I think that the review is almost complete. They like Oracle. They don’t feel that Oracle has any ties (to China). I think that they are going to get all of TikTok worldwide. They are going to hire 25,000 people in America. Apparently Secretary Mnuchin is very happy about the security concerns. Oracle CEO Safra Catz is saying we are ready. We have a gigantic cloud presence and we are already doing a lot in advertising. This is going to be today or maybe tomorrow.
There are 55 million users at 79 minutes a day and there are 100 million users per month. It is a prize asset. The reason why the deal is going to be done is because Oracle is a trusted company in the White House. It’s not going to be that Oracle owns it. It is going to be owned by these PE firms, some of it Oracle, and that’s why I think the deal is going to be approved.
The Wall Street Journal tonight is reporting that the deal may actually include a piece of the TikTok globally as well:
China’s ByteDance Ltd. would retain a majority ownership stake in its TikTok app as part of a proposal to be reviewed by national-security regulators on Tuesday with an eye toward settling the high-profile deal by a deadline Sunday, according to a person familiar with the situation.
The proposal includes Oracle Corp. ’s bid to become TikTok’s U.S. technology partner as part of an effort to address the administration’s national-security concerns surrounding the Chinese-owned video-sharing app.
Source: Wall Street Journal
“We just got this proposal over the weekend it would be inappropriate for me to comment on it,” said Treasury Secretary Steve Mnuchin yesterday in an impromptu press gathering this afternoon. “It’s going to go through a national security review in the next couple of days and then we’ll be sitting down and reviewing it with the President. But as we’ve said before a condition of any deal is to make sure that we believe that the code is safe, that U.S .citizens personal data is safe, and that the phones are safe. We have a lot of confidence in Oracle so we’ll be reviewing the technical issues with them.”
Is the Oracle TikTok deal dead on arrival? According to China state-affiliated media China will not allow ByteDance to sell TikTok’s U.S. operations to Oracle (or Microsoft), nor will the company be allowed to give the source code to any U.S. buyers. CGTN Digital reports that its sources say that despite news reports to the contrary ByteDance will not be selling TikTok’s U.S. operations to Oracle.
The U.S. Department of the Treasury will be reviewing the deal for the U.S. operations of TikTok. The reported sale was designed to avoid an outright ban of TikTok in the United States because of concerns that data from U.S. citizens were being transferred to the communist government of China.
“We just got this proposal over the weekend it would be inappropriate for me to comment on it,” said Treasury Secretary Steve Mnuchin in an impromptu press gathering this afternoon. “It’s going to go through a national security review in the next couple of days and then we’ll be sitting down and reviewing it with the President. But as we’ve said before a condition of any deal is to make sure that we believe that the code is safe, that U.S .citizens personal data is safe, and that the phones are safe. We have a lot of confidence in Oracle so we’ll be reviewing the technical issues with them.
Oracle has confirmed Secretary Mnuchin’s statement that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle will serve as the trusted technology provider. Oracle noted that it has a 40-year track record providing secure, highly performant technology solutions.
