Donald Trump saved TikTok in the US. Whether that pays off for him remains to be seen. The adage No good deed goes unpunished comes to mind as a warning.
For the past year, Trump has defied a statute passed by Congress to shut down the China-based (and CCP-connected) social media platform currently owned by Bytedance. The law, upheld by the Supreme Court, required either an immediate sale of TikTok to American interests or its exclusion from the US market. Trump’s repeated postponement of enforcing that law has paid off, according to Axios:
TikTok has signed a deal to divest its U.S. entity to a joint venture controlled by American investors, per an internal memo seen by Axios. …
The agreement is set to close on Jan. 22, per an internal memo sent by CEO Shou Chew.
- Oracle, Silver Lake and Abu Dhabi-based MGX will collectively own 45% of the U.S. entity, which will be called “TikTok USDS Joint Venture LLC.”
- Nearly one-third of the company will be held by affiliates of existing ByteDance investors, and nearly 20% will be retained by ByteDance.
The Oracle connection is certainly interesting. Larry Ellison also has partnered with his son David to make a bid for a hostile takeover of Warner Discovery. Ellison has enough wealth to put multiple irons in the fire, of course, but this deal still values TikTok’s US operations at $14 billion. Assuming the purchase price is the vicinity, Oracle had to pony up at least a few billion dollars to get a controlling general partnership with MGX, which was the requirement set in statute for TikTok to have access to the US market. Will that weaken the Ellisons’ bid for WBD? Stay tuned.
The agreement assigns control of the algorithm and security to Oracle as well:
“A trusted security partner will be responsible for auditing and validating compliance with the agreed upon National Security Terms, and Oracle will be the trusted security partner upon completion of the transaction,” the memo notes.
Upon the closing, the U.S. joint venture “will operate as an independent entity with authority over U.S. data protection, algorithm security, content moderation and software assurance, while TikTok global’s U.S. entities will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing,” it adds.
This puts the deal in China’s court. The Xi regime had resisted any sale of TikTok or access to its algorithm ever since Congress took up the bill that required the sale. Xi and Trump both used TikTok as a bargaining chip in a much broader trade dispute. In September, Trump announced that China had agreed in principle to a sale, but this is the first indication that Xi had allowed serious negotiations to move forward.
CNN reports that Xi is still holding his cards close to the vest:
The deal is expected to need approval from the Chinese government before closing. While Trump has said Chinese President Xi Jinping is on board with the deal, Beijing has not officially confirmed his approval. The deal is also expected to require regulatory approvals from both countries.
When asked if China had approved the deal and for comments on the agreement to create the new US joint venture, Chinese foreign ministry spokesperson Guo Jiakun said Friday: “As for the specific question, I’d refer you to the competent Chinese authorities. China’s position on the TikTok issue is consistent and clear.”
That sounds as though Beijing wants more negotiations. However, there may not be much to discuss at this point. Xi will retain ownership of the TikTok algorithm in other regions; Oracle will need to determine how to interact with it while utilizing a US-based algorithm that safeguards user data domestically. That may prove to be a challenge, but if any entity has the necessary expertise in relational databases and predictive algorithms to succeed, it’s Oracle.
Needless to say, this will be viewed as a triumph for Trump. In his first term, Trump raised the issue of CCP intelligence penetration via TikTok, which pushed Congress into action. Later, though, Trump saw the political potential of salvaging the platform if it could be divested from the control of Bytedance and China’s intelligence services. Trump spent much of this year confounding his conservative allies by postponing the enforcement of the ban on TikTok in the US as leverage in trade negotiations, but also as a potential way of gaining political credit from young voters who campaigned hard for its survival.
Assuming this deal holds, Trump will want to claim that victory and credit, and he’ll deserve it. However, when viral content starts hammering Trump and his policies, that credit may not last too long, and neither will the warm fuzzies that come along with it. Trump had better have a plan to use TikTok for real engagement, rather than just assume that gratitude alone will carry the day in the midterms.
Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.
Help us continue to report on the president’s economic successes and combat the lies of the Democrats. Join Hot Air VIP and use promo code MERRY to get 74% off your membership!
