What happened to the TikTok agreement? The Trump administration is silent

Do you remember TikTok? That hugely popular user-generated video app that grabbed headlines for months as a potential national security threat due to its Chinese ownership?

It looks like President Donald Trump’s administration may have forgotten.

TikTok has not had a meaningful dialogue with the Trump administration’s Committee on Foreign Investment in the United States (CFIUS) for weeks, according to people familiar with the matter. Company executives are still interested in entering into a technology partnership with Oracle to address national security concerns – although President-elect Joe Biden isn’t as concerned about the risk profile of Chinese-owned TikTok. (TikTok’s parent company is ByteDance, based in China.) These people have requested not to be identified to discuss confidential matters.

CFIUS ‘Nov. 12 deadline calls on ByteDance to “assign all tangible or intangible assets or property, wherever located, used to enable or support the operation by ByteDance of the TikTok application in the United States.”

But the CFIUS order does not say what happens if ByteDance does not divest its assets. That uncertainty prompted TikTok to file a petition on Tuesday to the United States Court of Appeals for the DC Circuit, calling for a review of CFIUS actions.

“For a year, TikTok has actively engaged with CFIUS in good faith to address its national security concerns, although we disagree with its assessment,” TikTok said in a statement. “In the nearly two months since the President gave preliminary approval to our proposal to address these concerns, we have offered detailed solutions to finalize this deal – but we have not received any substantive feedback on our extensive data privacy and security framework.

Trump claimed that TikTok posed a threat to national security because it collected data from American users, which could then be viewed by the Chinese government. Although TikTok continues to deny this, the company still wants to move forward with a deal to eliminate the issue of security as an overhang of the business, people said.

Spokesmen for Oracle and the US Treasury could not be reached for immediate comment. A Biden technology adviser for the transition said it was “too early to tell” Biden’s take on TikTok. Biden’s campaign called on employees to remove TikTok from their work and personal devices due to security concerns in July.

On August 14, the CFIUS issued its ruling that ByteDance had to divest its US assets within 90 days, “unless that date was extended for a period not to exceed 30 days”, which did not happen. .

This mandate triggered a series of events. First, there was talk that ByteDance would sell all of its TikTok assets in the US, Canada, New Zealand, and Australia to Microsoft or Oracle.

Then the Chinese government halted the transaction by requiring ByteDance to obtain a license to sell TikTok to a foreign entity.

With the Nov. 12 deadline still pending, ByteDance instead agreed to sell 20% of a new US-based company called TikTok Global to Oracle, which was looking for a top-tier cloud client, and to Walmart, which was interested in the platform as a channel. for e-commerce. The deal also called Oracle a “trusted technology provider,” which would have meant moving some TikTok functions to Oracle’s cloud. Oracle could also have verified TikTok’s source code in the United States, but Bytedance would not transfer algorithms and technologies to Oracle.

This transaction, which President Trump approved on September 19, has never obtained permission from the Chinese government. There was a disagreement over the exact terms, with Trump and Oracle claiming that ByteDance would not retain any ownership of the new TikTok Global, and instead cede ownership to its US-based venture capital owners and other backers. foreign funds. But ByteDance said it would still own 80%.

Trump has since tested positive for the coronavirus on October 2, sending him to hospital, followed by weeks of election preparation. These events sidelined the TikTok agreement.

TikTok doesn’t know when or if it will hear from the Trump administration again, said two people behind Tuesday’s petition. The Trump administration has great legal flexibility around CFIUS and could still push to ban the application despite a temporary October 30 injunction that prevents the government from banning the application. The ambiguity has prompted TikTok to act now, one of the people said.

– CNBC’s Jordan Novet contributed to this report.

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