Trump’s doozy of a TikTok deal

Fully Charged
Bloomberg

Hi there, it's Shelly. Over the weekend, U.S. President Donald Trump patted himself on the back for the resolution of a months-long saga over the fate of TikTok in what he called "a great deal for America."

But make no mistake on TikTok. No matter how much Trump spins this deal, he got almost nothing he originally asked for. There's no sale of the Chinese-owned company to an American owner. There's no wrestling TikTok's killer algorithm from Chinese hands. And the promises of cash paid to the government are hazy.

Instead, the arrangement forced by the president's orders last month declaring the popular video-sharing app a national security threat will leave China's ByteDance Ltd. with 80% of the new TikTok, which has been dubbed "TikTok Global." ByteDance keeps majority control and ownership, while the remaining 20% of the company will go to Oracle Corp. and Walmart Inc., people familiar with the deal talks have said.

Trump has touted a few key selling points of the hastily thrown together agreement. His supporters can point to the vague promise by TikTok to create 25,000 American jobs. Trump can say TikTok's data is being stored by Oracle in the U.S. (no matter that TikTok was already largely storing American data on U.S. servers run by Alphabet Inc.'s Google and Amazon.com Inc.). And Trump has said that $5 billion from the deal will go toward, controversially, "patriotic education."

However, that money wouldn't be paid out until the new TikTok stages an initial public offering, planned for a year from now, and ByteDance said it first learned about it from media reports. Walmart and Oracle said the $5 billion would come from future tax dollars. 

Another talking point: If you factor in U.S. investors' stake in ByteDance, plus the eventual Walmart and Oracle stakes, Americans control 53% of TikTok. But those investor stakes won't translate into direct control of the new company. Meaning that some of the core national security questions around the app will go unanswered.

And notably, leaders at both Walmart and Oracle are known to have collegial relationships with Trump. Oracle co-founder Larry Ellison has hosted a fundraiser for the president on his California golf course. Perhaps inevitably, those relationships have raised questions of special treatment.

Security experts have said that if Trump was chiefly concerned about Chinese access to U.S. data and control over a major American social network, there's no way the Oracle deal would pass muster. But most people not obsessively following the TikTok saga will come away with sound bites like "jobs," "data security" and "U.S. control," without sticking around to hear the details, anyway. 

The result is an amazing sleight of hand by ByteDance, which got dragged into a geopolitical mess and managed to come out ahead. It's also a win for China, which stayed mostly silent while Trump blustered, and then came out with new rules banning the export of artificial intelligence from its shores. But above all, the whole TikTok soap opera points to the absurdity of the tech policy strategy in the U.S. right now. 

If this deal was actually about national security, it wouldn't have mattered that TikTok pledged to create more U.S. jobs. And if U.S. leaders' top priority was data privacy and stopping disinformation, lawmakers would join the rest of the world in passing laws that govern the use of technology and look out for users of all tech companies—not just Chinese ones. Shelly Banjo

If you read one thing

San Francisco's techies, detached from office life, have decamped en masse for Lake Tahoe, alarming locals. Protestors at a roundabout traversed by Bay Area drivers held signs that read "Stop littering," and "Flatlanders = noise, traffic, garbage, pollution."

And here's what you need to know in global technology news

Trump's curbs on WeChat have been put on hold by a U.S. magistrate judge.

Facebook is being sued for allegedly spying on Instagram users through the cameras on their mobile phones

Amazon's Zoox gets the green light for robotaxi tests in California. 

Read more on how Trump has been good for Oracle's cloud ambitions

 

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