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There's now a deal on the table to let TikTok continue operating in the U.S. with the backing of a major American tech firm, potentially staving off President Trump's plan to ban the popular Chinese-owned video app by mid-month.

Yes, but: Software giant Oracle's proposed deal isn't the straightforward acquisition that Microsoft had jockeyed for until falling out of the running this weekend, and the whole affair is still rife with unknowns.

Driving the news: The Trump administration is reviewing a deal that would make Oracle TikTok's "trusted technology partner" in the U.S., Treasury Secretary Steven Mnuchin confirmed to CNBC Monday, after multiple press outlets reported Sunday night that Oracle had made such an offer.

  • The proposal includes "many representations for national security issues" from Oracle, Mnuchin said, as well as a commitment to establish TikTok's global headquarters in the U.S. and create 20,000 new American jobs.

Meanwhile: Chinese state media reported early Monday that TikTok parent ByteDance isn't selling its U.S. operations or the algorithm driving the app — to Microsoft or Oracle.

  • Some commenters took that as a sign that Beijing is quashing all hopes of a deal of any kind. Yet the report would also appear to track with the more limited arrangement Mnuchin described.

Between the lines: In the middle of talks last month between U.S. companies and China's ByteDance, which owns TikTok, the Chinese government instituted new rules that prevent "technology based on data analysis for personalized information recommendation services" from being exported without a license.

  • China's move threw a new spanner in the works of a TikTok deal because TikTok's recommendation algorithm is the "secret sauce" that has won the app its success.
  • It also transformed the conflict from one where U.S. and Chinese businesses served as shadow proxies for their governments to one where the two nations' leaderships are directly clashing.

The intrigue: Oracle's CEO Larry Ellison is a prominent Trump supporter and the company has close ties to the administration. That could give the company an edge in trying to win White House approval for a deal that might not meet all the demands Trump has made.

  • The president has said that TikTok must become a fully U.S.-owned company — so the "trusted technology partner" approach may not fly.
  • Trump has also insisted — without providing any rationale for such an unprecedented demand — that the U.S. Treasury receive a cut of any deal.

The catch: The U.S. has argued, without providing evidence, that TikTok's ties to the Chinese government imperil the data of its U.S. customers.

  • It's unclear how a deal that gives TikTok an American "partner" to run its cloud operations would satisfy U.S. security concerns.
  • "A deal where Oracle takes over hosting without source code and significant operational changes would not address any of the legitimate concerns about TikTok," Alex Stamos, a cybersecurity expert and former Facebook security head, wrote on Twitter.

Of note: Last year TikTok signed an $800 million contract with Google to provide cloud services, according to The Information.

What's next: For a deal to happen, ByteDance, Oracle, and both the U.S. and Chinese governments would all need to sign on.

  • Any one of the four could blow it up, so "no deal" remains a real possibility.
  • Mnuchin said the deadline for a deal is this coming Sunday, as laid out in Trump's executive order banning the app, and not this Tuesday, as the president has repeatedly insisted.
  • If Sunday rolls around without a deal, TikTok — which has already filed a lawsuit over the executive order — is likely to seek a temporary injunction to stop the government from shutting it down.

Go deeper

Dec 21, 2020 - World

U.S. warns Chinese investments in Israeli tech industry could pose security threat

Netanyahu meeting with Chinese President Xi Jinping in 2017. Photo: Xinhua/Rao Ainmin via Getty Images

The Trump administration is concerned Chinese investments in the Israeli tech industry could harm Israeli and U.S. national security, assistant secretary of state for Near East Affairs David Schenker said Monday at a conference organized by the SIGNAL think tank, which focuses on Israeli-Chinese academic cooperation.

Why it matters: The Trump administration has previously raised concerns in private about Chinese involvement in Israel’s booming tech sector. This is likely the first time the administration has done so in public.

Dec 22, 2020 - World

U.S. charges against Zoom executive highlight tech's China problem

Illustration: Aïda Amer/Axios

Last week, the U.S. Department of Justice charged a China-based Zoom executive with disrupting video meetings hosted by users outside China that commemorated the 1989 Tiananmen Square massacre. The complaint reveals the now-terminated employee was sending the private data of some U.S.-based users directly to the Ministry of State Security (MSS), China's main civilian spy agency.

Why it matters: Researchers and U.S. government officials have warned that the Chinese government might require China-based employees of U.S. companies to hand over private company data to Beijing. The DOJ's charges indicate those fears are valid.

Dems race to address, preempt stimulus fraud claims

Illustration: Aïda Amer/Axios

Biden officials are working to root out the systematic fraud in unemployment and Paycheck Protection Program claims that plagued the Trump administration’s efforts to boost the economy with coronavirus relief money, Gene Sperling told House committee chairmen privately this week.

Why it matters: President Biden just signed another $1.9 trillion of aid into law, with Sperling tapped to oversee its implementation. And the administration is asking Congress to approve another $2.2 trillion for the first phase of an infrastructure package.

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