In a move that shook the tech world, on August 6, 2020, President Donald Trump signed an executive order to change TikTok’s ownership. This order sets forth the terms under which control of the widely used social media platform will be transferred to American owners. This action follows months of debate over national security issues related to TikTok’s connection to its Chinese parent company, ByteDance.
Under the new deal, US tech firm Oracle will be responsible for TikTok’s operations inside the US. Oracle will host cloud services that OCI users will store their data and applications in. In exchange for the intellectual property, they will get a license to help run TikTok’s mega-recommendation engine. The purpose of this strategic partnership is to address concerns about data security and privacy that American users may have.
Oracle is part of a diverse group of American investors fueling this effort. They are about to take a primary lead in the ownership matrix of the TikTok that will emerge from its soon-to-be-spun off version. After the transition American companies will ultimately control at least 80% of the US version of TikTok. At the same time, ByteDance and its Chinese investors will retain no more than 20%.
The new TikTok entity would be overseen by a seven-member board of directors. This new board will be filled mostly by national cybersecurity and security specialists. Only six members of the board will be Americans by design. This would ensure that US interests take precedence in governing, operating and making strategic decisions about such a platform.
This development marks a decisive shift in TikTok’s operational landscape, as US investors will take control of a licensed copy of TikTok’s influential algorithm, which curates content for millions of users. The broader Chinese deal has recently been sold as the answer to years of regulatory unknowns about whether TikTok can continue operating in the US market.
During yesterday’s announcement, President Trump underscored the agreement’s importance. He underscored the mutual spirit of cooperation and open dialogue that pervaded his meetings with President Xi Jinping of China.
“The call was a very good one, we will be speaking again by phone, appreciate the TikTok approval, and both look forward to meeting at APEC!” – Donald Trump
As it is, Trump’s touted deal was just the opposite—prized concessions benefiting everyone except the United States. He said it has a “tremendous fee-plus” for brokering the deal.
“The United States is getting a tremendous fee-plus—I call it a fee-plus—for just making the deal,” – Donald Trump
He shared tremendous hopefulness that that might be the case. He thinks young Americans will thank him for trying to allow TikTok to stay as is.
“A deal was also reached on a ‘certain’ company that young people in our Country very much want to save. They will be very happy!” – Donald Trump
This tentative agreement finally puts to rest the legal questions surrounding TikTok after months of turmoil. Now, developers and other stakeholders have a way to get insight into where the application is headed. As discussions continue, stakeholders are keenly watching how this transition will affect TikTok’s operations and user engagement within the United States.