US Bloomberg, citing anonymous sources
"ByteDance, Oracle negotiation plan
expects to pass Chinese regulatory review"
[Asia Economy Reporter Cha Min-young] It is highly likely that the revised sale plan for the Chinese video-sharing application (app) 'TikTok' will be approved. Analysts suggest that a final agreement reflecting the demands of both the U.S. and China has become more probable amid the power struggle between the two countries over information security issues and concerns about the leakage of core technology.
On the 18th (local time), Bloomberg News cited anonymous sources reporting, "ByteDance is increasingly confident that the revised technical collaboration plan with Oracle will pass the censorship of Chinese regulatory authorities."
Beijing authorities have claimed the right to preemptively block the sale of critical source technologies. However, this could actually signal a green light for the deal as long as it does not include the transfer of the artificial intelligence (AI) algorithms that underpin the TikTok service. It is also analyzed that this would be the case even if ByteDance transfers a majority stake in TikTok.
This can also be interpreted as an opening for further negotiations, given that former President Trump expressed discomfort with China holding a majority ownership. Previously, ByteDance reached a negotiation agreement with Oracle in which ByteDance would hold most of the TikTok shares, while Oracle, Walmart, and venture capitalists (VCs) would hold minority stakes. In this regard, President Trump had opposed the deal, stating that China would hold majority ownership.
Whether Zhang Yiming, the founder and CEO of ByteDance, will relinquish a significant portion of TikTok ownership is also a point of interest. Zhang Yiming plans to grow TikTok into a major app comparable to Google or Facebook. The Chinese government has given Zhang Yiming the option regarding shares and other matters, as long as ownership of the service's core technology is not transferred.
Furthermore, Mike Pompeo, the U.S. Secretary of State who had strongly opposed the use of the TikTok app within the U.S., is reported to have recently softened his hardline stance. Bloomberg, citing multiple sources, stated, "One sign that the deal will pass is that Secretary Pompeo, who had raised strong doubts, has lowered his opposition. He also conveyed this to President Trump."
Meanwhile, the TikTok revision plan has been repeatedly modified to accommodate requests from the U.S. Treasury Department aimed at alleviating domestic information security concerns. These include ▲ establishing a new TikTok headquarters in the U.S., ▲ setting up an independent board of directors composed of U.S. citizens approved by the U.S. government, and ▲ creating a national security committee led by U.S. information security experts. Oracle will have the authority to review the source code and software behind the TikTok service, but ByteDance will retain ownership of the technology.
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