ByteDance Ltd., the privately owned Chinese technology company, will soon sell minority ownership stakes in the TikTok app to American companies Oracle Corp. and Walmart Inc. The proposed arrangement, however, does little to address the most important U.S. national security concern with the wildly popular video-sharing platform. Pictured: ByteDance's corporate headquarters in Beijing, China. (Photo by Greg Baker/AFP via Getty Images)
ByteDance Ltd., the privately owned Chinese technology company, will soon sell minority ownership stakes in the TikTok app to American companies Oracle Corp. and Walmart Inc.
Oracle will become the "secure cloud technology provider" for a new U.S. company, TikTok Global, which will own most of the app's worldwide operations.
The proposed arrangement, however, does little to address the most important U.S. national security concern with the wildly popular video-sharing platform.
Using his emergency powers, President Trump on August 6 prohibited, after the expiration of a 45-day period, Americans from any transaction with ByteDance or any of its subsidiaries. As a practical matter, the order contemplated the closure of the TikTok app if it was not sold to an American company. The order has been extended.
TikTok has been accused of surveilling users, censoring content, and mishandling information of minors. There are also concerns the app allowed the surreptitious downloading of software on devices.
Not everyone likes the proposed sale to Oracle and Walmart. "The more reporting I do on this the more it is a sleazy back room deal that protects no one and advantages Trump supporters and, inexplicably, the Chinese government," America tech journalist and guru Kara Swisher tweeted September 20.
By "Trump supporters" she means Larry Ellison, Oracle's co-founder and chief technology officer.
Her assessment that the deal "protects no one" is a bit much. Oracle's handling of TikTok's operations reduces, if not eliminates, Beijing's ability to steal data and engage in some of the app's other nefarious activities.
Swisher, however, has a point when it comes to the most critical risk. Beijing, from all indications, has used TikTok to manipulate American opinion.
ByteDance's app employs the world's most sophisticated commercially available artificial intelligence for understanding users' likes and dislikes. TikTok delivers, better than any other platform, customized content, which is the reason it is so addictive. TikTok knows, from what you have seen before, those things you now want to view. By giving you more of the good stuff, Beijing can motivate you to act in the way it wants.
TikTok, therefore, is a powerful tool to undermine the United States. As Australian national security expert Paul Dabrowa told Gatestone last month, "My team discovered that TikTok can be used to trigger desired responses and behaviors."
In fact, Beijing has been using TikTok to flood the world with "weaponized propaganda," which can, Dabrowa states, "destroy the credibility of government institutions and turn a population against itself."
Sound familiar? A Radio Free Asia report from August, for example, tells us that a People's Liberation Army intelligence unit, working out of the now-closed Houston consulate, was using big data to identify Americans likely to participate in Black Lives Matter and Antifa protests and then sending them "tailor-made" videos on how to organize violent demonstrations.
The PLA for this purpose used TikTok.
At the moment, this report is unconfirmed, but it sounds accurate, merits investigation, and should persuade the administration to halt and reexamine the proposed TikTok deal.
The deal, unfortunately, does nothing much about TikTok's algorithm. "The current plan does not involve the transfer of any algorithms and technologies," ByteDance announced. "Oracle has the authority to check the source code of TikTok USA."
As Senator Marco Rubio told Maria Bartiromo on Sunday Morning Futures on September 20, control of the source code is critical.
Beijing, not surprisingly, is determined to keep all of TikTok's secret sauce, even issuing updated export-control rules at the end of last month to prevent the transfer of ByteDance's tech.
Color TikTok's owner happy after the rule change. "ByteDance in driver seat, algorithm in Chinese hands," is how CNBC's Beijing Bureau Chief Eunice Yoon summarized ByteDance's announcement of the proposed deal.
Beijing, which had been furious about Trump's August 6 TikTok executive order, is now issuing bland, purring releases about the proposed arrangement. The official China Daily even quoted a Shanghai professor as saying the sale could serve as a template for the future. "The TikTok team retains stewardship over the app," said Shen Yi, a professor at Fudan University, to the paper.
That glowing assessment suggests the Communist Party actually likes the sale to Oracle and Walmart.
What's not to like? Beijing-based ByteDance gets a lot of cash — the app will carry a valuation that could be as high as $60 billion — and the Communist Party will be able to continue to use TikTok for malign purposes.
President Trump, according to reports, has given his tentative approval for the ByteDance-Oracle-Walmart deal. The only acceptable arrangement, however, is to completely sever China from TikTok's U.S. operations — or ban the app entirely.
Beijing bans U.S. apps in China, so why is Washington not banning Chinese apps in America? Especially when they are being used to bring down the American government.
Gordon G. Chang is the author of The Coming Collapse of China, a Gatestone Institute Distinguished Senior Fellow, and a member of its Advisory Board.