ByteDance chooses a partnership with Oracle for TikTok in the USA

by Echo Wang and Greg Roumeliotis

(Reuters) – US-based Oracle announced Monday that it will partner with ByteDance to continue TikTok’s activities in the United States, a transaction that will take the form of a partnership and not a pure sale and simple by the Chinese group.

ByteDance has discussed with Oracle and Microsoft a divestiture of the US operations of its popular video application, which US President Donald Trump has threatened to ban if the Chinese group does not sell them.

While Tiktok is best known for its dance videos which are all the rage with teenagers, U.S. executives have raised concerns that users’ personal data could be transferred to Chinese authorities. Tiktok, which has no less than 100 million users in the United States, says it would never share this data with Chinese authorities.

Discussions over the future of TikTok in the United States have been made difficult by China’s opposition to a forced sale, and Beijing last month amended its export control rules, allowing it to intervene on the transfer of the TikTok algorithm to a foreign acquirer. Reuters reported last week that the Chinese government would rather shut down Tiktok in the United States than tolerate a cession.

Oracle said Monday it was associated with a proposal submitted over the weekend by ByteDance to the US Department of the Treasury. Under the proposal, the US group would be TikTok’s “trusted technology provider”, he said.

Oracle is said to be responsible for managing the personal data of TikTok users in the United States and is also negotiating a stake in the app’s US operations, sources told Reuters. TikTok user data is currently stored in Alphabet’s “cloud” system, with a backup in Singapore.

Some of ByteDance’s major shareholders, including General Atlantic and Sequoia, would also get minority stakes in TikTok’s US operations, one of the sources said.

“We can confirm that we have submitted a proposal to the Treasury Department which we believe will address the security concerns of the (US) government,” TikTok said, without providing any details.

It is not known whether Donald Trump, who demands that almost all of TikTok’s activities in the United States be owned by an American company, will approve this proposal. Its Treasury Secretary Steven Mnuchin told CNBC on Monday that the US administration would review the project this week.

ByteDance and Oracle did not respond to requests for comment. The White House refused to speak out.

Oracle shares took 4.5% in the middle of the day on the New York Stock Exchange.

(Echo Wang and Greg Roumeliotis in New York, David Shepardson in Washington, MelissaFares in New York, Stephen Nellis in San Fransisco and YingzhiYang in Beijing, French version Flora Gomez, edited by Blandine Hénault)

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