Shortly after Microsoft announced on Sunday that its offer to acquire TikTok in the United States, Canada, Australia, and New Zealand was rejected by TikTok’s parent company, ByteDance, Oracle confirmed on Monday that it won a deal to be a “trusted technology provider” of TikTok by managing TikTok’s cloud operations in the United States; the proposal was sent to the Treasury Department and requires the government’s approval.
As previously reported, earlier discussions were revolving around a full acquisition of TikTok’s US operations, but the proposed deal illustrates that the focus shifted to a partnership. The discussions and proposals came about after growing concerns about TikTok’s privacy and security arose. Specifically, in July, Senators pushed the Department of Justice (DOJ) to investigate TikTok over Chinese ties and their handling of data, claiming that it could pose a risk to Americans. Furthermore, the President signed an executive order in early August banning all “transactions” with TikTok and ByteDance and also requiring an American company to purchase TikTok’s US operations, citing national security concerns and pointing to concerns that the personal data of Americans would be shared with the Chinese government. There is a deadline of Sept. 20 to announce a plan for the sale of TikTok’s US operations or for the company to be banned by Sept. 29; the deal would have to be completed by November 12. TikTok recently sued the Trump administration over the ban.
Secretary of the Treasury Steven Mnuchin told CNBC, “I will just say from our standpoint, we’ll need to make sure that the code is, one, secure, Americans’ data is secure, that the phones are secure and we’ll be looking to have discussion with Oracle over the next few days with our technical teams.”
“We can confirm that we’ve submitted a proposal to the Treasury Department which we believe would resolve the Administration’s security concerns,” TikTok said in a statement. “This proposal would enable us to continue supporting our community of 100 million people in the U.S. who love TikTok for connection and entertainment, as well as the hundreds of thousands of small business owners and creators who rely upon TikTok to grow their livelihoods and build meaningful careers.”
There are already critics of the proposal; former Facebook security chief Alex Stamos tweeted, “A deal where Oracle takes over hosting without source code and significant operational changes would not address any of the legitimate concerns about TikTok, and the White House accepting such a deal would demonstrate that this exercise was pure grift.”