U.S. Treasury Secretary Mnuchin has confirmed that the administration has received an offer from enterprise database company Oracle to merge with Chinese short video sharing company TikTok (Jitterbug International).
Mnuchin made the announcement in an interview with US business television station CNBC on Monday (September 14). He said, “We have a lot of confidence in both Microsoft and Oracle. They (TikTok) have chosen Oracle. We will be reviewing this acquisition with both parties and our technology teams to see if they have made reasonable arrangements to ensure the security of the telephone data of American citizens.”
President Trump signed an executive order last month requiring TikTok to complete sale negotiations within 45 days or it would be shut down. However, Mnuchin said that deadline has been extended from the original Sept. 15 to Sept. 20.
TikTok then began merger talks with U.S. software giant Microsoft. Oracle only came on board in late August.
TikTok finally chose Oracle. TikTok reportedly did so because it was unhappy with both Microsoft’s offer and the manner in which the merger was conducted. Microsoft was going to buy out TikTok’s U.S. business, and TikTok was going to get out of the deal altogether. This approach was far from the expectations of Beijing, which insisted that TikTok’s offer not include its core technology-algorithms.
Oracle’s approach, on the other hand, would allow TikTok to retain a small stake in the company, and its user data would be transferred to Oracle for safekeeping, so that the acquisition would not affect U.S. users. However, it is unclear whether the Oracle proposal includes the transfer of the algorithm technology.
China’s Sina.com reports that TikTok will continue to make the U.S. its headquarters and create 20,000 U.S. jobs. The media outlet interpreted what Mnuchin called a “data compliance partner” as being similar to Apple’s data compliance program in China and not involving a sale, as Trump said, or a transfer of core technology.
Previous reports in both the Wall Street Journal and Reuters have called the Oracle-TikTok deal “a partnership” rather than an ordinary merger. The South China Morning Post said TikTok would not sell or transfer the source code that powers its video applications.
Oracle issued a statement Monday confirming its deal with TikTok for the acquisition.
Oracle said the deal is subject to approval by the White House and the Committee on Foreign Investment in the United States.
Analysts say the U.S. administration’s main reason for blocking TikTok is that it fears the huge amount of user information it holds could be used by the Chinese Communist Party to compromise U.S. national security. If TikTok personnel continue to be involved in U.S. operations, Oracle will only be responsible for data management as a partner, which is too far removed from Trump’s vision to pass U.S. government scrutiny.
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