China’s Byte Jumping said Thursday (Sept. 17) that its proposal to make U.S. database company Oracle its technology partner for TikTok (Jitterbug International) needs to be approved not only by the U.S. government, but also by Chinese government authorities.
The Chinese media have also confirmed this. The Observer, a Chinese media outlet based in Shanghai, reported on Thursday that it was told by Byte Jump that the final agreement would be subject to approval by Chinese and U.S. authorities in accordance with the law.
The Chinese government has not intervened in TikTok’s sale, nor has any government agency intervened to prevent the sale of TikTok’s algorithm technology, the company’s head said recently. This change in China’s attitude has added new variables to the deal between TikTok and Oracle.
The White House received a proposal for a partnership between TikTok and Oracle late last week. According to the proposal, Byte Jump will establish a new, independently operated company based in the United States to be responsible for TikTok’s global business.
In this new company, ByteTek will hold a controlling interest. Oracle would hold a minority stake in the new entity and a stake in TikTok’s global business, including its U.S. operations. In addition, Wal-Mart Stores Inc. may also become an investor in the new company.
To address the U.S. government’s concerns about the security of TikTok’s user data, Oracle will act as a “trusted” partner for the storage and management of all of TikTok’s U.S. user data.
Under the terms of the agreement, Oracle will gain full access to TikTok’s source code and updates to ensure that Byte Jump does not use a “backdoor” to collect data on 100 million U.S. users, Bloomberg said Thursday, citing people with knowledge of the matter.
But there’s clearly a big gap between this proposal and what Trump asked for last month. Trump wants to see a sale of TikTok, not a partnership. He is demanding that ByteDance divest from TikTok, sever any possible ties between the short-form video sharing company and the Chinese Communist Party, and sell TikTok outright to an American company. Otherwise, Trump said the U.S. will ban TikTok’s U.S. operations.
President Trump on Wednesday balked at an arrangement under which Byte Jump would take a majority stake in TikTok’s U.S. business. Trump said Wednesday, “If that’s the case, I wouldn’t be satisfied.”
In addition, Trump is also unhappy with TikTok’s continued retention of its technology. He argued that a deal that did not include the sale of the technology was unacceptable.
The new proposal also drew strong opposition from six Republican members of the U.S. Congress, who urged Trump to veto it.
TikTok’s user recommendation algorithm technology is also on the restricted list.
Chinese Foreign Ministry spokesman Wang Wenbin urged the U.S. to respect the principles of market economy and fair competition at a regular press conference Thursday. He said the TikTok deal in the U.S. is subject to Beijing’s approval.
U.S. Treasury Secretary Mnuchin said Monday that the Committee on Foreign Investment in the United States (CIUS) is reviewing the new proposal between TikTok and Oracle. At the same time, a national security review based on a presidential executive order is also underway.
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