Oracle-TikTok bid to urge national security panel finding today

Oracle-TikTok bid to urge national security panel finding today
While details of the agreement between Oracle and China’s ByteDance Ltd. remain covert , Kushner expressed optimism that it might clear the administration’s key hurdles.

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TikTok declined to comment. Representatives for Oracle and Treasury didn’t immediately reply to requests for comment. (File Photo)
A U.S. national security panel reviewing Oracle Corp.’s bid for TikTok is meeting Tuesday afternoon to make a decision whether to recommend the president approve or reject the deal, consistent with two people conversant in the matter.

Oracle’s proposal lacks the payment to the U.S. government that President Donald Trump has insisted be the condition of any deal, consistent with two people conversant in the plan. Yet the corporate will attempt to use the promise of making 20,000 new jobs through the favored video app as how to win his approval.

Treasury Secretary Steven Mnuchin, who has played a central role in brokering a deal that might shift the Chinese-owned video app’s U.S. operations over to an American company, leads the Committee on Foreign Investment within the U.S., or Cfius, and has promised to offer Trump the panel’s recommendation later in the week .

White House adviser Jared Kushner voiced strong support for Oracle Corp.’s bid for TikTok during an interview with CNBC earlier Tuesday, albeit the proposal could still come short of President Donald Trump’s demands that any deal protect national security and include a payout for the U.S. government.

The U.S. is undertaking a two-track national censoring of Oracle’s TikTok proposal in the week and any sale still requires sign-offs from both the U.S. and China. One is thru Cfius, and a separate one is thru the Department of Commerce .

While details of the agreement between Oracle and China’s ByteDance Ltd. remain covert , Kushner expressed optimism that it might clear the administration’s key hurdles.

“Hopefully the appliance qualifies on the merits for what we’re trying to accomplish from a national security point of view,” Kushner said. “America’s interest therein is basically national security — we would like to form sure that people’s data is protected.”

The deal unveiled Monday by Oracle seeks to deal with the national-security concerns raised by Trump last month when he ordered the sale of TikTok’s U.S. business. The administration says that Chinese ownership of the app poses a risk to American users’ data security which Beijing could use the service to deliver disinformation and propaganda to the service’s 100 million active users within the U.S.

Based on what’s been revealed thus far about the deal, national security experts say the arrangement doesn’t satisfy those concerns, which the Trump administration laid call at executive orders and public statements.

“It’s not clear the primary goal has been met and therefore the second goal is even harder ,” said Stewart Baker, a national security lawyer at Steptoe & Johnson and a former assistant secretary with the Homeland Security Department. “There could still be tons of negotiating to try to to .”

The proposal, unveiled partially , doesn’t involve Oracle to shop for the business outright. Instead, the corporate would invest during a newly restructured global TikTok, with operations based within the U.S., consistent with people conversant in the proposal. Bytedance would maintain majority ownership and a minimum of two shareholders in TikTok’s Chinese parent company, General Atlantic and Sequoia Capital, would take stakes within the new business, said the people, all of whom asked to not be identified because the terms aren’t finalized. Coatue Management would also retain a stake within the new TikTok, another person said.

The companies haven’t fully addressed Trump’s repeated demand for a payment to the U.S. Government. “I said the us has got to be compensated, well compensated,” he reiterated earlier this month, a requirement that has confounded security experts who say such a payment would stretch his authority under U.S. law.

Even if security officials recommend Trump block the deal, the president has the ultimate say and he can overrule their recommendation. Trump has until Sept. 20 to form a choice .

The deal, if finalized, would create what Mnuchin called “TikTok Global.” The unit would have its headquarters within the U.S. and make 20,000 jobs, he said, without offering details.

It’s unclear how a replacement subsidiary would create that a lot of U.S.-based jobs. TikTok has many open jobs listed immediately , from content moderation to advertising sales. Snapchat Inc., which operates a social media app almost like TikTok, employs 3,000. By comparison, Facebook Inc. and Instagram Inc. each have 45,000 workers.

TikTok declined to comment. Representatives for Oracle and Treasury didn’t immediately reply to requests for comment.

Cfius includes members from the State, Defense, Justice, Commerce, Energy and Homeland Security departments. The panel assesses deals for national security implications by watching factors that include: U.S. business’s contracts and ties with the federal government; also as whether the deal involves critical infrastructure, like transport systems, data networks and other communication systems.

Bytedance has been working with Cfius since October 2019 on addressing the committee’s concerns, consistent with an individual conversant in the matter, and for months has been trying to separate somewhat from China, including hiring a replacement CEO and giving autonomy to U.S. executives for the app’s bug fixes and merchandise changes. the corporate had already began moving data and content moderation to the U.S., where it stores its data with firms like Amazon.com Inc. and Alphabet Inc.’s Google, with backup servers in Singapore. If Cfius accepts these remedies, it could allow Bytedance to stay control of 1 of its prized assets, the person said.

Even if TikTok’s data is stored by Oracle within the U.S., that would could still leave ByteDance with some control over the pc code behind how the app chooses which videos are shown to users. If TikTok’s algorithms remain in ByteDance’s hands, security experts say, the code might be manipulated by Beijing to run information campaigns or deliberately show video to American users, maybe even to influence the U.S. elections.

With ByteDance controlling the corporate , it’ll in theory be ready to control what users watch. James Lewis, senior vice chairman of the middle for Strategic & International Studies, a Washington think factory , said Oracle and ByteDance will need to convince Cfius there’s a firewall between them when it involves the algorithm.

“The algorithm might be a channel to pump in spyware which was a risk before,” Lewis said. “It’s a fixable risk, but Oracle has got to explain how they’re going to fix it. If they will prove they will do this to the satisfaction of the committee, this is often a workable deal.”

Kushner said earlier Tuesday that if the TikTok-Oracle deal doesn’t meet Cfius’ requirements, “then it won’t be accepted,” he said, adding: “I don’t believe a final judgment has been made yet on whether it qualifies.”

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