Trump gave Oracle the OK to save TikTok from the ban: the short video app will be managed by a US-based newco
TikTok manages to avoid Donald Trump’s US ban for another week. The download block was supposed to be triggered on September 20, but with the agreement reached for the purchase between ByteDance and Oracle (also blessed by US President Donald Trump) the San Francisco court granted a formal postponement to September 27.
If the deal between Oracle and the Chinese company that developed TikTok goes through, the app that allows you to create and share short funny videos can be considered safe. With the prospect of a definitive agreement, the fears about the security of the app, accused of being a threat both for the privacy of users and for government agencies, are calmed. TikTok will then be managed by a U.S.-based newco, while ByteDance will be a “passive partner,” with Oracle not having access to the artificial intelligence algorithm, but will be able to control its source and prevent cyber attacks.
TikTok, the agreement between Oracle and ByteDance
Microsoft had been the first company to show interest in TikTok and to make a purchase proposal to ByteDance, which refused to include in the contract also the sharing of the artificial intelligence algorithm that is the heart of the app. Different instead is the agreement with Oracle, which will not have access to the algorithm but will still be able to verify the source code and prevent the opening of doors that could allow the fuda of users’ personal data.
This solution reached between the companies a new company by right, the newco TikTok Global, controlled by ByteDance for 80%, by Oracle (which will provide a “secure cloud” service) for 12.5% and by Walmart for 7.5%. The legal headquarters could be in Texas and the new company will be an opportunity to create 25000 jobs. Although the deal was announced by the companies and Trump gave his blessing, the download blockade was only postponed to September 27, and not cancelled, for a very specific reason. If the US president has any doubt that Oracle and Walmart will not have complete control over TikTok Global, the deal is bound to blow.
TikTok, what changes and what benefits
At the moment, for users there will be no change in the fruition of the app, which can continue to be freely downloaded even in the United States. What does change, however, is the geopolitical balance of the war between the US and China, which also passes through apps like TikTok. Trump’s strategy is clear, with bans issued for other apps deemed a security risk on American soil, but TikTok is too popular and widespread to be totally obscured.
The agreement reached between Oracle and ByteDance therefore has advantages for both the company and the Chinese company. With the acquisition of TikTok, Oracle would strengthen its market share in the Biz Cloud field. ByteDance, on the other hand, will have the advantage of keeping control of its own algorithm, overcoming the restrictions of the Trump administration.
For users, instead, the advantage is all about the protection of their personal data that will now be stored on Oracle servers in America and no longer on servers in China. Chinese law, we recall, allows a state official to access data on a server that is physically located in China at his discretion, even if there is no investigation into any crime.