ByteDance Ltd.’s TikTok website is displayed on a smartphone in an organized photograph.
Andrew Harrer | Bloomberg | Getty Images
Of the many questions that still revolve around TikTok’s fate, the biggest may be whether the Trump administration will approve a restructuring plan that keeps China-based ByteDance under control, both financially and operationally, in the United States.
If you follow his words, President Donald Trump has already ruled out this option.
However, according to people familiar with the matter, the proposal that ByteDance and Oracle sent to the US government would keep TikTok together under ByteDance’s operational control. Oracle’s role will be that of a “trusted technology partner,” which stores and protects data within its US offices. TikTok also said it plans to disclose its algorithm to third parties.
ByteDance is in discussions with both Oracle and Walmart about stakes in US business, according to people familiar with the matter, but the sale will not cover 100% of US assets. This is a departure from the deal that was nearly completed several weeks ago worth between $ 20 billion and $ 30 billion. That transaction fell apart in the 11th hour after China rejected it, saying it would need to approve a deal that calls for the export of the artificial intelligence technology used by TikTok.
ByteDance made a proposal that avoids selling U.S. assets or all of TikTok – which Trump said was necessary to avoid a ban – due to conversations with CFIUS and Treasury officials, according to people familiar with the matter. ByteDance believes its proposal with Oracle addresses CFIUS concerns based on precedent and the nature of the US government’s concerns with data sharing, one of the people said.
The White House declined to comment. TikTok declined to comment, and Oracle did not respond to a request for comment.
It is still unclear whether the Trump administration will accept ByteDance’s proposed deal. Treasury Secretary Steve Mnuchin told CNBC on Monday that the US government plans to review the deal this week.
“I’ll just say from our point of view, we will have to make sure that the code is, one, secure, the Americans’ data is protected, that the phones are protected and we will look to have discussions with Oracle in the next few days with our technical teams,” Mnuchin said on “Squawk Box”.
Kevin Mayer’s situation
If Trump abandons his former position, allowing the app to continue to operate in the United States without a full sale, former TikTok CEO Kevin Mayer will be an unfortunate victim of Trump’s hyperbole.
Mayer had planned to announce his resignation from TikTok in conjunction with a deal announcement, according to people familiar with the matter. But when news leaked to the Financial Times that he was planning to step down when a sale was announced – which was imminent at the time – he anticipated the announcement of the deal and said he would step down immediately.
The reason Mayer quit was that he signed up to run a global company with operations in the United States, the sources said. The deal on the table required Oracle or Microsoft to acquire and operate TikTok in the U.S. Mayer didn’t want to run a U.S.-only company as a division of Microsoft or Oracle, and he didn’t want to be CEO of TikTok without the U.S. (Mayer lives in Los Angeles.)
“I understand that the role I signed up for, including managing TikTok globally, will be very different following the US administration’s action to push for a sale of the US assets,” Mayer wrote in a letter to employees when he resigned.
It’s possible now that TikTok will remain a global company under ByteDance’s control, meaning Mayer would have no reason to step down.
There is further irony for Mayer: he was part of a team that was instrumental in bringing Oracle to the table as a competitive bidder against Microsoft, which first entered negotiations to acquire TikTok’s U.S. assets in July, according to people who they are familiar with the matter.
The US government took interest in a potential ban on TikTok after India shut down the application in late June. After ByteDance entered into talks with Microsoft to take over U.S. assets to avoid a ban, Mayer held talks with Oracle’s chief executive Safra Catz about a potential deal, people said. Catz is on the board of directors of Walt Disney. Mayer spent more than 20 years at Disney and left the company for his TikTok CEO job in May.
Oracle has emerged as ByteDance’s preferred partner, given the company’s close ties to the Trump administration and willingness to accept a deal in which it did not buy 100% of the assets, two of the people said.