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Commentary: Did Oracle offer a TikTok deal to serve Trump?

By Michael Hiltzik, Los Angeles Times on

Published in Business News

Here are some of the strange things about Oracle's deal for TikTok's U.S. social media platform that make it seem like a sop to President Trump.

- Structuring the deal as one in which Oracle is a "trusted tech partner" of TikTok rather than an outright buyer doesn't do anything to wall off the app from its Chinese founders, which supposedly was at the heart of Trump's concern about the app.

- TikTok, which allows users to post short videos online, is a major hit among consumers, especially young users. To say Oracle has never served that market would be a huge understatement; Oracle's core market is business - most consumers are probably unaware it even exists.

- Trump seemed to put his thumb on the scale favoring Oracle in its competition with Microsoft for TikTok, stating last month, "I think Oracle is a great company, and I think its owner is a tremendous guy. He's a tremendous person. I think that Oracle would be certainly somebody that could handle it."

He was referring to Oracle co-founder Larry Ellison, one of the very few Silicon Valley figures openly supporting him.

The rivalry for TikTok was initiated by Trump himself, through an executive order he issued on Aug. 6 threatening to ban TikTok from the U.S. unless a sale deal was reached by Sept. 20.

 

Microsoft seemed the most likely buyer until the Chinese government imposed restrictions on the export of artificial-intelligence technology such as that used by TikTok.

The restrictions threw a wrench into Microsoft's plans, creating an international stalemate between Trump's demands and Chinese policy.

Oracle's deal appears to meet the Chinese restrictions, but doesn't appear to meet the Trump order's terms because it doesn't appear to impose security rules on how user data can flow from the U.S. to China. It's subject to a ruling by the Committee on Foreign Investment in the United States, which is an agency of the Treasury Department.

"A deal where Oracle takes over hosting without source code and significant operational changes would not address any of the legitimate concerns about TikTok," Alex Stamos, Facebook's former chief security officer, tweeted Sunday. "The White House accepting such a deal would demonstrate that this exercise was pure grift."

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