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Following a dramatic weekend, social media platforms TikTok and WeChat have for the time being avoided an outright ban in the US, with TikTok clinching a last-minute partnership deal with Oracle, while in San Francisco a judge halted the Trump administration’s ban on WeChat, citing the First Amendment of the US Constitution. However, big questions still remain.
Both apps are owned by Chinese companies – ByteDance in TikTok’s case and Tencent in WeChat’s – and have found themselves caught in the firing line in the US’s escalating trade war with China, with president Trump having branded them both a threat to that country’s national security.
On Friday 18 September, the US Commerce Department issued orders that would have effectively banned both apps as of Sunday 20 September – with clauses preventing TikTok and WeChat from being downloaded from Apple or Google app stores, and forbidding others from doing business with them, for example, by providing financial or network services.
On Saturday 19 September, after barely 24 hours had elapsed, Trump went on to approve a proposed partnership deal between Oracle, TikTok, and US supermarket chain Walmart, creating a new US-headquartered TikTok Global entity.
“Heavily influenced”, in Oracle’s words, by the recent success of a move of Zoom’s video-conferencing capacity to the Oracle Public Cloud, the partnership will see TikTok run on the Oracle Cloud and Oracle become a minority investor in TikTok Global.
“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. We are 100% confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world,” said Oracle CEO Safra Catz.
“This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders,” she said.
Larry Ellison, Oracle CTO, added: “TikTok picked Oracle’s new Generation 2 Cloud infrastructure because it’s much faster, more reliable and more secure than the first-generation technology currently offered by all the other major cloud providers.”
TikTok interim CEO Vanessa Pappas, who stepped into the hotseat at the end of August after her predecessor Kevin Mayer beat a hasty retreat, said: “We’re pleased that today we’ve confirmed a proposal that resolves the administration’s security concerns and settles questions around TikTok’s future in the US.
“Our plan is extensive and consistent with previous CFIUS [Committee on Foreign Investment in the United States] resolutions, including working with Oracle, which will be our trusted cloud and technology provider responsible for fully securing our users’ data. We are committed to protecting our users globally and providing the highest levels of security,” she said.
“Both Oracle and Walmart will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20% cumulative stake in the company. We will also maintain and expand the US as TikTok Global's headquarters while bringing 25,000 jobs across the country.”
Pappas said it was right that TikTok had come under increased scrutiny, and appreciated why, given the tough questions that are now being asked of other social media platforms.
Questions and contradictions
However, almost immediately contradictions have been exposed in the minutiae of the partnership, arising from remarks by Trump, who said TikTok Global would be a “brand new company”.
“It will have nothing to do with any outside land, any outside country, it will have nothing to do with China,” said Trump.
This would appear to go against the fundamentals of the agreement that gives Oracle and Walmart control of a 20% stake, with ByteDance subsequently confirming plans to carry out a round of pre-IPO financing to give it control of the remaining 80% of TikTok Global, which will be listed on a US stock exchange within the next 12 months.
At face value, the partnership also does not appear to address some of the US’s key concerns, such as who controls TikTok’s algorithms and source code.
Some observers have raised questions as to why Trump – who has repeatedly boasted of his negotiating and deal-making prowess – would approve an arrangement that doesn’t appear to give him much of what he wanted.
It has also been noted that the deal was presented to Trump by a company, Oracle, whose leadership appears to back him – Catz is a Trump supporter who worked on his transition team in 2016 and has retained his ear since then, while Ellison has hosted lavish fundraisers for the president.
ProPrivacy’s Ray Walsh said that the partnership didn’t solve anything, and in fact raised new concerns over data protection and user privacy.
“Even with the shakeup created by the new structure, TikTok will continue to collect huge amounts of data from users and TikTok Global servers provided by Oracle in the US will be subject to US warrants and gag orders, which means that data privacy will remain a concern,” he said in remarks shared with Computer Weekly.
“In addition, TikTok will remain a platform that can potentially be leveraged to influence US consumers and, despite the bravado from the Trump administration, a large percentage of TikTok Global will remain under Chinese control and influence.
“While the new deal should make it much harder for any data collected by TikTok to be spoon-fed to the Chinese government, the stark reality remains that the new deal does little to shore up the amount of data that TikTok’s algorithms collect,” he said.
“TikTok, like so many other social media apps, will remain invasive and will continue to collect data that can be used for marketing purposes and analysing consumer preferences. Without strong US privacy laws, data stored on Oracle’s servers could be intercepted and passed to the US government – creating a whole new set of privacy concerns for users,” added Walsh.
Read more about TikTok
- President Trump’s US TikTok ban over national security is resting on a vague foundation. The concern can be applied to multiple industries and products.
- The Commerce Department of the US government has banned new downloads of TikTok and WeChat in the US, and announced new prohibitions on doing business with them.
- Oracle’s joint venture proposal could create thousands of jobs and secure TikTok’s future outside China.