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Dec 15 2020

TikTok: Deal or No Deal?

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The cold war between the US and China is that of a reality TV show, everyday there’s a new spin and unnecessary drama. 

This is why we decided to break down and understand the situation that is the US President waging a data-driven cold war on TikTok… and the complex deal between tech companies that resulted from it.

(Image sourced from politico.com)

 

What’s the deal with the deal:

November 12th is the US government’s floating deadline to pressure ByteDance into selling TikTok’s US business. This catch-22 deal is all based on the allegations from the president that the emerging social media platform allows the Chinese government to access or harvest American users’ data. TikTok has denied any of those theories, stating that it stores any US users’ data outside of China and that data is not of interest to Chinese law. 

After about a month of confusing online and offline political quagmire subjected to the social media platform, the WSJ published last week that the government and ByteDance are now in talks of keeping TikTok partially operating across the US. 

Then, just this week, TikTok reached an agreement to partner with US-based software company, Oracle. The software company was co-founded by Larry Ellison, one of the few tech moguls in Silicon Valley who supported Donald Trump both politically and financially. The objective was to avoid a complete sale of the platform, to eliminate the possibility of an American company taking over TikTok’s US business, so the app wouldn’t lose any of the key functions that made it so popular, to begin with. 

In response to the pressured sale, the Chinese government set a list of new restrictions on AI technology. This requires its own companies to get approved from the State Government to take part in International Trade. 

This could mean that China blocked the use of TikTok’s algorithm that allows the app to find videos curated for your feed — which is basically the source of users data and the entire concept of the app.

What’s Trump’s Deal with TikTok?

The US Government’s initial concerns about TikTok being a potential threat to the USA’s national security began in July 2020, for no reason other than the platform’s headquarters are located in China. Trump then threatened to ban the app from the US before issuing any administrative orders.

The big takeaway from all the chaos is that there is an international interest in TikTok’s assets. The app’s potential deal is estimated to be worth between 20-50 billion US dollars.  

Both Microsoft, Oracle, Softbank and Walmart have come up in that discussion, sparking conspiracies about the platform’s competitor, Instagram, who came out with the feature ‘Instagram reels’ in response to the news of the potential sale. ByteDance’s CEO backed the potential joint offer between Microsoft and Walmart. Oracle’s winning deal has been backed by Trump and a group of ByteDance’s US investors.

The weaponization of TikTok in this cold war between China and the US raises some interesting questions on the power social media has when it comes to geopolitics. The art of the TikTok deal in itself raises all sorts of debates, from how scared is Facebook of TikTok’s success? Does Donald Trump even know what TikTok is? Is TikTok really going to be a more important debate topic of the US Presidential election then say… healthcare? How safe is social media if our ownership of our data is causing this much chaos?

So, Deal or… No Deal?

In short, both ByteDance and Oracle will still face many hurdles before they actually complete this deal. The deal that was settled between ByteDance and Oracle was prior to the new rules and restrictions put in place by the Chinese Government. Now, ByteDance will have to reconsider its options, which could push the deal past November — past the 2020 election. 

The closest thing we have to a black-and-white answer in regards to the TikTok vs. Trump cold war is to consider the options for TikTok. ByteDance can either sell the app without the algorithm, negotiate with the US government about an extension of the pressured ban, seek approval from China to sell the algorithm or find a US buyer to license TikTok’s algorithm from ByteDance. But in conclusion, this ‘deal’ has no guarantee of passing the White House and no guarantee of proceeding to align with Beijing’s regulations. 

(image source: thedailybeast.com)

 

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@ Socially Powerful