Before the deadline set by US President Donald Trump on the video-sharing app TikTok, nation officials will evaluate an offer that could see US tech giant Oracle become a partner in a company. China that has been described as a national security risk.
Treasury Secretary Steven Mnuchin confirmed on Monday that Washington had received an offer from Oracle regarding TikTok’s US operations after ByteDance, the parent company of the video-sharing app, rejected a proposal from Microsoft.
But key details about the deal were murky, and it was unclear whether the company would be approved by Washington regulators.
“I will confirm that we received a proposal over the weekend that includes Oracle as a reliable technology partner,” Mnuchin told CNBC, adding that the offer would be handled by a government panel that reviews foreign transactions for national security reasons.
“We need to make sure that the code is, one, secure, that the data of the Americans is secure, the phones are secure, and we will have discussions with Oracle over the next few days with our technical teams,” Mnuchin said.
Oracle confirmed their presentation, saying the company “is part of ByteDance’s proposal to the Treasury Department over the weekend that Oracle will serve as a trusted technology provider.”
Trump effectively ordered the sale of the Chinese company’s US operations before September 20, after which the app would be shut down.
However, Chinese state media CGTN and China News Service reported on Monday that ByteDance will not sell TikTok to Oracle, while The Wall Street Journal said the transaction is being structured as a partnership and will likely not be a total sale. All three outlets cited unidentified sources.
– Ban is still a threat –
Carl Tobias, a professor at the University of Richmond School of Law, said Oracle’s description of itself within the company was ambiguous and could not alleviate national security concerns.
“It is not clear what Oracle means by saying that it will serve as ‘TikTok’s trusted technology provider.’ This idea is critical because one of the main reasons for Trump’s executive orders was concern about the threat to national security from Tiktok. “Tobias said.
“Unless much more is done to clarify exactly what the contours of the agreement are and how they will work in practice, many observers and I wonder if the agreement will be enough to avoid an enforcement ban in the US.”
The TikTok brand of short, wacky videos made on users’ cell phones has become popular in the United States and beyond, but Trump’s claims that China could use TikTok to track the location of federal employees, create dossiers. for the purpose of blackmailing and performing corporate acts. the espionage has caused a diplomatic storm between Washington and Beijing.
TikTok has rejected the charges and filed a lawsuit for the crackdown, claiming that the US order was a misuse of its International Emergency Economic Powers Act because the platform is not “an unusual and extraordinary threat.”
Last month, China’s Ministry of Commerce published new rules that could make it difficult for ByteDance to sell TikTok to a US entity by adding “civil use” to a list of technologies that are restricted for export.
ByteDance had promised to “strictly abide” by the new export rules.
– Microsoft offer rejected –
Downloaded 175 million times in the United States, TikTok is used by up to 1 billion people around the world. It has repeatedly denied sharing data with Beijing.
Microsoft had indicated in early August that it was interested in acquiring TikTok’s operations in the United States, but announced on Sunday that the offer had been rejected.
“We believe that Microsoft would only buy TikTok with its core algorithm, which the Chinese government and ByteDance were not willing to give up,” Wedbush analyst Daniel Ives said in a note.
“Given the need now to get a green light from Beijing after its export rules were changed a few weeks ago, the days of TikTok in the US are probably numbered with a shutdown now, the next step.”
S&P warned Monday that the TikTok transaction could result in a downgrade of Oracle’s credit rating, depending on whether the company needs to take on significant debt for the transaction.
“An agreement where Oracle is a technology partner rather than a full owner could lower the price,” S&P said. “And if Oracle has co-bidders, that could further reduce the financial impact.”
Shares in Oracle were halted shortly after the opening due to pending news about the company, but resumed later in the day. Around 1700 GMT, the shares were up 4.6 percent at $ 59.61.