Enlarge /. The TikTok logo is displayed on a smartphone, with the logo of the parent company ByteDance in the background.
For several months, President Donald Trump pushed for TikTok to be banned or sold to a US company. It appears to have prevailed when Oracle confirmed that a deal had been made with ByteDance through TikTok. That transaction doesn't have to necessarily allay White House concerns about the popular video app, however – and the deal has a long way to go in a short time to close.
The specific terms of the agreement have not yet been published. The arrangement is not the full sale that Trump pushed for just last Friday. China's export ban on machine learning and artificial intelligence algorithms prevented this type of direct capture.
Oracle said very little about the transaction, which first leaked late Sunday. On Monday morning, the company confirmed that it had proposed to Finance on the weekend of September 12-13 to become ByteDance's "trusted technology provider." On Tuesday morning, she repeated the statement as part of a filing with the US Securities and Exchange Commission.
Treasury, you're up
US Treasury Secretary Steven Mnuchin spoke to CNBC on Monday about the next steps for the deal. Mnuchin did not discuss the details of the transaction, but reiterated that Oracle was the "trusted technology partner". He added that Oracle had "made many statements on national security issues" and promised to "create TikTok Global as a US-headquartered company with 20,000 new jobs."
The proposal was forwarded to the Treasury Department as it houses the US Foreign Investment Committee (CFIUS). Composed of members from more than a dozen different agencies, CFIUS conducts national security reviews on transactions in which a foreign company acquires part or all of the US company. The proposed Oracle deal is just the opposite – a US company invests in a foreign platform – and is usually not scrutinized by CFIUS. However, the committee has been heavily involved in the entire TikTok saga so far.
CFIUS began a retrospective review of TikTok last fall, which was formed when ByteDance acquired and renamed US company Musical.ly. The White House ended that review on Aug. 14 with an executive order (PDF) stating that the acquisition of Musical.ly is indeed a national security threat, bans the acquisition retrospectively, and requires CFIUS to oversee a sale process.
"The deadline is September 20th," Mnuchin told CNBC, despite Trump setting the deadline for September 15th several times. Until then, "There are two processes that we are going through. One is the CFIUS review, the other is the national security review under the President's Executive Order … We will review this in the CFIUS committee this week and then make a recommendation to the President and check it out with him. "
When Mnuchin was specifically asked about the national security threats posed by TikTok's proprietary algorithms, which may not be part of the business after all, he did not answer the question directly. Instead, he said, "From our point of view, we need to make sure the code is secure, that the Americans' data is safe, that the phones are secure, and we will try to have talks with Oracle for a few days over the next few years our technical teams. "
Trump advisers disagree on whether the administration should accept the Oracle deal or take more stringent measures, reports the Wall Street Journal. According to the WSJ, Mnuchin supports the Oracle deal and secured the support of Commerce Secretary Wilbur Ross ahead of the weekend. The WSJ did not name the "China Hawks" in the White House who reportedly opposed the deal. However, there are Republicans outside the White House who are openly calling on the CFIUS to ban the transaction.
Senator Josh Hawley (R-Mo.), Who frequently speaks out on technology issues, urged regulators to block the deal.
"The evidence available allows only one conclusion: ByteDance has no intention of relinquishing ultimate control of TikTok," wrote Hawley in a letter to Mnuchin (PDF).
The deal "is totally unacceptable and in total contradiction to the President's Executive Order of August 6," wrote Hawley, concluding that a total sale or ban would be preferable. "CFIUS should immediately decline any collaboration between Oracle and ByteDance and send the ball back to the ByteDance court so the company can find a more acceptable solution."
However, sources told CNBC this morning that the White House is looking to expedite approval and that an announcement giving the deal the green light could be made today.