Mar 11, 2022 - Economy

TikTok's national security saga nears its end

The TikTok logo with 0s and 1s

Illustration: Aïda Amer/Axios

TikTok's national security clash with the U.S. government may be nearing its conclusion, without the sort of shareholder overhaul that was previously proposed.

Driving the news: The social media company is in advanced talks with the Committee on Foreign Investment in the United States (CFIUS) to store all of its U.S. user information with Oracle, without Chinese owner ByteDance being able to access it, as first reported by Reuters and confirmed by Axios.

  • Data sovereignty has been the core regulatory concern since this all began in mid-2020, at least for career staff.
  • Certain political appointees of the Trump administration also expressed fears that the Chinese government could use TikTok to influence U.S. political or social sentiment, but content moderation seems outside the scope of current talks.
  • Oracle itself has not been party to the current negotiations.

Backstory: Former President Trump in mid-2020 issued an executive order that would have banned TikTok were the company not almost immediately sold to a U.S. buyer.

  • The social media app succeeded in getting some court injunctions, in part because the EO was written with the sophistication of a 4th grade book report, and it also rejected a takeover offer from Microsoft.
  • TikTok instead supported a deal that would have included both Oracle and Walmart becoming minority shareholders and its entire board consisting of U.S.-based directors. But that proposal, which Trump accepted "in principle" and then incorrectly explained in public statements, remained on hold.
  • Meanwhile, CFIUS continued to insist that ByteDance unwind a 2018 merger that effectively created TikTok in the first place. Things got put on the back burner early last year due to political considerations in both the U.S. and China, but never really went away.

Fast forward: If an agreement with CFIUS is indeed reached, TikTok would then need to transfer physical control of its U.S. user data to Oracle's cloud. There also would need to be a system created whereby Oracle could provide national security assurances to government agencies.

  • Once completed, all of this could set TikTok up for an IPO.

The bottom line: For a company known for short-form content, this sure has taken a very long time.

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