It’s 6 am Sunday morning and, although I thought I had wrapped up Cache on Friday afternoon, here I am with the fifth round of edits related to TikTok...the story that won’t die. That said, there are two important angles I want to cover: advertising and government regulation.
It was announced earlier in the week that the Microsoft/Walmart bid had been rejected by ByteDance and Oracle was the winner of the TikTok lottery. But as the details of the deal leaked out, many were dissatisfied that few (if any) of the stated national security goals had been addressed.
The Oracle deal differs significantly from President Trump’s initial demands, which called for the US version of TikTok to be severed off and sold. Reports indicate that some in the White House are dissatisfied with the deal, but no one has gone as far as publicly calling for the deal to be rejected — in part because it might result in the app being shut down entirely.
That pressure forced the Trump administration to propose revisions to the deal terms, which were later accepted by TikTok.
The Treasury Department, which leads a group reviewing the deal for national security purposes, provided TikTok’s owner, ByteDance, with revisions to its proposal on Wednesday, one of the people said. Some of the revisions were intended to address how TikTok’s data and source code would be handled and secured, one of the people said. The two sides have agreed in principle, but are still discussing some technical details, the other person said.
At a news conference on Wednesday, Mr. Trump said he was “not going to be happy” if ByteDance still owned a majority of TikTok as part of its deal with the government.
But in the meantime:
The Commerce statement said that starting Sunday, U.S. companies will be banned from distributing WeChat and TikTok, meaning the two major mobile app stores run by Apple and Google will have to remove the apps from their libraries. The statement also blocks U.S. companies from providing services through WeChat “for the purpose of transferring funds or processing payments within the U.S.”
But the announcement also lays out a separate time frame specific to TikTok, giving it until Nov. 12 to resolve the U.S. national security concerns. The rules that start Nov. 12 include provisions that block U.S. companies from providing internet hosting and services for TikTok. This could be directed at the deal being negotiated between TikTok and Oracle, which would provide cloud services for TikTok if Trump approves, and could give TikTok and Oracle more time to hammer out a deal that will satisfy the president.
In an interview with Fox Business on Friday, Ross said the bans will affect TikTok and WeChat differently at first. He said TikTok will still function, but users will not be able to upgrade the app.
“It’s not doing the same thing to TikTok as to WeChat,” Ross told Fox. “As to TikTok, it’s just upgrades, maintenance things like that, that would be shut down at this stage. The real shutdown would come after Nov. 12 in the event that there is not another transaction. So it’s very different how the way the two are being handled.”
It is hard to think the favorable deadline for TikTok was not related to either a) Trump’s close personal relationship with Oracle Co-Founder, Larry Ellison, or b) the administration’s desire to not piss off a lot of young voters right before the election.
As for the deadline, Apple and Google have two options when removing an app:
- Remove it from the App Store, preventing future downloads, but letting existing users continue using the software on their device.
- The nuclear option, where device makers remove it from the App Store while simultaneously remotely removing the software from devices.
By all accounts, they planned on the first approach, which (for the sake of this audience) begged the question of whether advertising on TikTok would be permissible during this weird season of instability.
Keep in mind, all of the app-banning talk is political posturing anway.
As for advertising, according to multiple sources, advertising would have continued as planned.
That said, every report I saw quoted TikTok as the source of their information. I saw no official statement from the government regarding advertising.
Saturday evening, this all came bubbling to the surface again as news broke regarding the new ownership structure of this political quagmire, as well as Trump’s blessing of the deal.
And yes, somehow Walmart wiggled their way into the Oracle deal after their bid with Microsoft failed.
As for the original national security concerns, most pundits are skeptical anything was actually accomplished.
From my observation, it does seem like some progress was made, as user data will be hosted on Oracle’s servers in the US. But that is about it. Was that worth this month-long ordeal? It’s doubtful. Remember, there is no evidence TikTok was doing anything nefarious with user data. In fact, TikTok had passed a national security review conducted by the US Government in late 2019. And it is still unclear whether Oracle will be conducting any source code reviews as a part of the deal - and if so, to what extent. We do know the prized TikTok algorithm is off-limits.
Lastly of note, TikTok is riding this rollercoaster without a CEO. However, one very interesting CEO prospect emerged this week:
While rushing to secure a deal, TikTok is also hunting for a permanent chief executive to replace Kevin Mayer, who resigned in late August, citing the changing political pressures of the role. Vanessa Pappas, the general manager of TikTok in North America, took over in the interim.
Among those whom TikTok has talked to about the job is Kevin Systrom, a founder and former chief executive of Instagram, people briefed on the matter said. Talks are preliminary, and no final decisions have been made, they said.
The parties to a deal expect to name an American chief executive of the new TikTok entity, one person familiar with the matter said.
Whew. It is almost like the US Government is ill-equipped to legislate big tech. 🙄