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Trump Doesn’t Get Much Out of the TikTok Deal, Except China Bashing
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Trump Doesn’t Get Much Out of the TikTok Deal, Except China Bashing

Campaign Donors Oracle and Walmart Get a 20% Piece of the Action, But that’s About It

Terry H. Schwadron

Terry H. Schwadron

If captured on video, it might play straight as a parody of the sort TikTok features.

After demanding banning of TikTok and WeChat software for download in the United States, Donald Trump said over the weekend that a deal to have 20% ownership by two American companies satisfies his concerns that data on U.S. users were being kept by China for evil, never-identified uses.

It’s been weeks of Trump pounding on the Chinese-owned company ByteDance in the name of protecting the security of American identity information – seemingly a totally defensible policy decision, if we only understood what the Chinese want with the account information of millions of American teenagers with pent-up desires to draw mustaches on images.

Does this arrangement make any of the estimated 100 million American TikTok users, teens or not, any safer?

At the White House, the judgment that even an offer by Microsoft to buy the whole company – an offer rejected by ByteDance — would not be enough. Ban TikTok software altogether.

OK, it’s China who’s the bad boy this season, and this is a clumsy way of slapping China – Communist China, as we keep hearing – from some kind of business success.

But now the solution is for Oracle and Walmart, whose executives are donors to Trump, to buy a piece of the company, make the same promise as Microsoft to keep information in American computers, and that’s the end of it? Isn’t this just creating a more-American data holding company that does the same thing?

Does this arrangement make any of the estimated 100 million American TikTok users, teens or not, any safer?

And if we’re so concerned about big data held by international social media companies, why aren’t we banging away at Facebook, Google and Apple – and for that matter, Oracle and Walmart, all of whom amass and amalgamate user data for commercial purposes.

Deteriorating Conditions

We can all appreciate how this blessing of part-ownership shows just how much relations between the United States and China have deteriorated, particularly in any contest over technological superiority.

The deal, which must still gain formal approval in each country, would create a new U.S.-based company, TikTok Global, in which Oracle and Walmart would own 20%.  The Commerce Department, which planned to bar TikTok from U.S. app stores, delayed the ban for a week. And there are pending court fights here too.

But exactly who would control the new entity remained unclear, and electronic data  being what it is, it is unclear that such a deal means account information will not be available internationally.

And does any of this affect users?

There seems a basic misunderstanding at this White House about what exactly American control means – other than the obvious political value of smacking China a few extra times just before elections.

ByteDance is partly owned by non-Chinese investors, including a lot of Americans, possibly increasing the U.S.-ownership stake and allowing the Trump administration to claim that the majority of the company is owned by Americans. Trump has increasingly argued that companies and apps with ties to China pose a threat to American national security, but never really spelled out either what that means or any evidence it is happening.

Trump insisted that the deal would fully address his administration’s national security concerns, saying that the “security will be 100 percent” and that the new companies would use a separate cloud from its Chinese parent. He incorrectly claimed that the new company would “have nothing to do with China.” Chinese investors will retain a substantial portion of the new company’s stake.

Sketchy Details

Of course, this being primarily a political issue, Trump was somewhat sketchy about details.

Trump also had argued the United States Treasury should receive a “very big proportion” of the sale price of any deal, but later acknowledged that there was no mechanism for the government to do that.

On Saturday, Trump said that deal would involve “about a $5 billion contribution toward education,” without specifying who precisely would be making the investment, or what the investment would be used for.  ByteDance said Sunday that it had been unaware of the $5 billion contribution it would supposedly be making.

No decisions have been made on whether to make the new entity a public company on American markets.

At Oracle, a corporate ally of the president, top executives, including Larry Ellison, worked on Trump’s transition team, have supported his policy initiatives and have donated more than $150,000 to his re-election campaign.

Over time, China has banned American social media services, and this flap represents the first time that the U.S. has responded in kind.

In addition to targeting TikTok, the administration said last week that it would force companies like Apple and Google to remove WeChat, a popular messaging platform owned by Tencent Holdings, from their app stores or prohibit companies from providing hosting or content delivery services to the app, potentially disabling it outright.

It’s a deal where, other than politics, no one really knows why there is a deal. You might even paint a mustache on it.

Featured image: With more than 46 million followers, 16-year-old Charli Grace D’Amelio of Norwalk, Conn., is TikTok’s most-followed female in the world. 

September 24, 2020