Latest Updates on the US TikTok Deal
▼ Summary
– TikTok faces U.S. controversy over concerns that user data could be accessed by the Chinese government through its parent company ByteDance.
– A framework deal has been established where a U.S. investor consortium, including Oracle, will control TikTok’s U.S. operations with an 80% stake.
– Oracle is expected to manage the app’s security and will replicate and secure a new U.S. version of the algorithm, with ByteDance having no access to U.S. user data.
– Reports indicate the current TikTok app will be discontinued in the U.S. upon the deal’s finalization, requiring users to transition to a new, unspecified platform.
– The situation stems from a 2020 executive order by President Trump and subsequent legal battles, with President Biden later signing a bill against TikTok, which the company is challenging in court.
For four years, the popular video-sharing platform TikTok has navigated a complex political landscape in the United States. Owned by the Chinese firm ByteDance, the app has faced persistent scrutiny over data security, with American officials concerned that user information could be accessed by the Chinese government. This ongoing tension has periodically disrupted the experience for millions of U.S. users, including a brief service outage earlier this year that was swiftly resolved.
The potential financial stakes are enormous. Analysts suggest that if a sale of TikTok’s U.S. operations proceeds, its valuation could surpass $60 billion. A significant development occurred recently when former President Donald Trump indicated that Chinese President Xi Jinping had approved a proposed deal. This arrangement would shift control to a consortium of American investors, a move ByteDance has publicly supported to ensure the app remains available to its American audience.
So, who is positioned to take over? Reports point to a “framework” agreement involving major players like Oracle, Silver Lake, and Andreessen Horowitz. This group is expected to hold a controlling 80 percent stake in a new U.S.-based entity. The proposed governance structure would see the board dominated by American members, with one seat potentially filled by a U.S. government appointee. Over the weekend, Trump also named other high-profile figures who might be involved, including media mogul Rupert Murdoch, Oracle’s Larry Ellison, and Dell Technologies CEO Michael Dell.
A central role appears to be reserved for Oracle, which is already TikTok’s U.S. cloud provider. The company is likely to be responsible for the app’s security and data management. A key part of the proposed deal involves Oracle creating and securing a new, independent version of TikTok’s core algorithm for American operations. Under this model, the U.S. owners would lease the algorithm from ByteDance, with Oracle tasked with retraining it. Critically, ByteDance would have no access to U.S. user data or any control over the American algorithm.
What does this mean for the average user? Some reports suggest that once the deal is finalized, the current TikTok app will be discontinued in the U.S., requiring users to migrate to a new platform. The specific features and identity of this new application, however, remain unclear.
The path to this point has been long and contentious. The saga began in August 2020 when Trump signed an executive order seeking to ban transactions with ByteDance. This was followed by efforts to force a sale of TikTok’s U.S. business, with companies like Microsoft and Walmart initially showing interest. Legal challenges temporarily blocked the ban, allowing TikTok to continue operating. The situation intensified under the Biden administration, which signed a bill targeting the app into law. TikTok responded by suing the U.S. government, arguing the ban violated the First Amendment rights of its users and maintaining that it does not pose a national security threat.
Trump’s current position marks a shift from his initial approach; he now advocates for a ownership split between ByteDance and an American company. The field of potential buyers has been crowded. One notable group, “The People’s Bid for TikTok,” organized by Frank McCourt, garnered support from figures like Reddit co-founder Alexis Ohanian and “Shark Tank” investor Kevin O’Leary. Another consortium, led by Jesse Tinsley, included Roblox co-founder David Baszucki and YouTuber MrBeast. Other rumored contenders have included Amazon, Microsoft, and former Activision CEO Bobby Kotick.
(Source: TechCrunch)
