TikTok Oracle Deal: No Technology Transfer, No Ownership, Rest All Is Fine

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The brouhaha around TikTok and the US administration simply refuses to subside.

In the ensuing see-saw of developments, ByteDance has seemingly attempted to set the record straight over its dealings and operations in the US.

In a statement issued this very morning (in Chinese no less) China’s ByteDance confirmed that it will retain an 80% stake in TikTok after selling a total of 20% to Oracle, its trusted technology partner, and Walmart, its commercial partner.

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Moreover, it also clarified that the company won’t be handing over TikTok’s algorithms or technologies to Oracle or any other partner. The company would instead give the American database giant the authority to perform security checks on “TikTok’s U.S. source codes.

The statements appear to be in stark contradiction of the comments about a possible deal inching closer by the US administration. ByteDance reiterated that the company will be in ownership of 80% stake of TikTok Global after its plans to carry out a small round of pre-IPO financing. Going in as part of the same deal, Oracle, Walmart and ByteDance are in agreement to list TikTok Global on an American stock exchange within 12 months, as reported previously.

As recently as last week, it transpired that Trump gave his blessing to a deal involving Oracle and Walmart taking up minority stakes TikTok Global, the company which will have the proposed headquartered in the US. With shares of 12.5%, Oracle would become the secure cloud provider and host American users’ data in the country and Walmart would handle the operational aspects with its stake of 7.5%. 

While Trump was also quick to point out that the new company TikTok Global would have nothing to do with China and have no outside interference, ByteDance has been insistent that the be in control of the majority of the company.

Some analysts have opined that because 40% of ByteDance is owned by U.S. venture capital firms already, the Trump administration can technically claim TikTok Global is now majority-owned by U.S. money. Even so, until the deal goes through many account details will continue to beg for clarity.

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The bone of contention with the algorithm transfer is also worth its weight in gold. ByteDance’s efforts to keep hold of them is understandable, given how its pioneering algorithms have been a cornerstone in its rise to prominence, with the ability to serve up videos, memes, news articles and other forms of content across its family of apps. The data-driven process has transcended cultural differences, arguably one of the reasons why TikTok became the first consumer app from China to conquer the West.

 With a good chunk of progress made last month, a deal appeared to be on the horizon, only for China to throw a spanner in the works by updating its list of technologies subject to export restrictions. With one of the technologies on the list related to recommendation algorithms, it also brought a dormant Beijing into the picture once again.

While the statements and Beijing’s rejuvenated chirping around the deal, the Chinese counterpart should certainly be wary to not miff the whimsical US administration, even if it is doing so on the pretext of protecting its interests. This salvo is just a latest in a long drawn out saga. Stay tuned to this space for more updates.

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