TikTok to split into separate company, partly owned by Oracle

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Oracle plans to take a stake in a newly formed TikTok company under the recently announced deal, the Financial Times reports. The new deal will not separate TikTok regionally, but will create a separate entity for the app, in which Oracle will take a minority stake. Oracle will also ensure that US user data is stored and processed in the United States, in accordance with the recommendations of the Committee on Foreign Investments in the United States (CFIUS).

TikTok was already headquartered in California, with nominal independence from the Chinese operation of ByteDance. The main change brought about by the deal is Oracle’s minority stake in the company, the size of which is still unclear. But if Oracle’s involvement makes TikTok a more legally separate company, it’s still likely that the resulting company will rely on algorithms and applications developed and deployed from China.

TikTok has pledged to increase hiring in the United States, and in an interview with CNBC, Treasury Secretary Steve Mnuchin described the deal as part of a larger effort to make TikTok a ” in the USA”.

It’s also unclear whether the new deal will result in any changes to how TikTok works or whether it will significantly address the security concerns that first motivated the proposed ban. As former Facebook security chief Alex Stamos put it on Twitter, “An agreement where Oracle supports non-source hosting and significant operational changes would not address any of the legitimate concerns about TikTok.”

Announced Sunday, the Oracle deal is part of a last-minute effort to prevent the app ban in the United States, as President Trump threatened. The president has yet to formally approve the deal, and according to the Financial Times, crucial details are still being determined.

The arrangement’s national security limits have also drawn criticism from Trump’s other Republicans. In an open letter Monday, Senator Josh Hawley (R-MO) urged Mnuchin to oppose the deal.

“A continued ‘partnership’ that allows for anything other than the complete emancipation of the TikTok software from the potential control of the Chinese Communist Party is totally unacceptable,” Hawley wrote, “and outright incompatible with the August 6 presidential decree.

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