Within the past year or so, a new kind of celebrity has gained prominence: the TikTok Star. TikTok is a social media platform where users post short videos featuring anything from dancing to comedy. Yet the app’s growth has not garnered only positive reviews. Concern that TikTok’s parent company, the Chinese based ByteDance Ltd., was misusing data and censoring information led to restrictions on the app’s distribution. However, a new acquisition deal with Oracle and Walmart appears to be resolving these concerns and allowing the app to continue to be used in the United States. While some members of Congress continue to feel that the app is a security threat, TikTok representatives insist that the app is safe and that the acquisition deal will be beneficial to Americans as it will provide thousands of employment opportunities.
On August 6, 2020, President Trump expressed unease at ByteDance’s use of American data, issuing an Executive Order “addressing the threat.” In this Executive Order, Trump outlined concerns about TikTok’s practice of automatically capturing information from user devices, including search histories and location, arguing that the Chinese Communist Party could use this information to “build dossiers of personal information for blackmail, and conduct corporate espionage.” Trump also noted TikTok’s reported censorship of information, including preventing the widespread dissemination of content regarding protests in Hong Kong and China’s treatment of minorities. Trump explained that TikTok was already banned from government phones and that other countries, such as India, had taken measures to prevent citizens from using the app.
In response to these concerns, Trump’s executive order gave the Department of Commerce 45 days to enact measures that would protect Americans’ data and privacy. On September 18, the Department of Commerce released a statement announcing that, as of September 20, TikTok would no longer be available for distribution in the United States.
Now, however, things appear to be looking up for those who create and view the app’s short videos. On September 19, 2020 TikTok announced its partial acquisition by Oracle and Walmart. In a post shared to the TikTok website (and tweeted in abbreviated form), interim head of TikTok Vanessa Pappas announced that the company had “confirmed a proposal that resolves the Administration’s security concerns.” The proposal in question will see the U.S. tech company Oracle become the app’s “cloud and technology provider,” responsible for securing data. Oracle will have full access to TikTok’s source code, thus preventing its Chinese parent company from being able to edit anything behind the scenes. Oracle, along with Walmart, will also be participating in a pre-IPO financing round, with Oracle acquiring 12.5% stake and Walmart gaining 7.5%. The acquisition will create a new company, “TikTok Global,” that will go public within a year.
In light of this deal, Commerce Secretary Wilbur Ross postponed TikTok’s removal from the app stores by a week. President Trump gave the deal his “blessing,” noting that it would be “great” if it were to go through. The proposal will need to also be approved by ByteDance before it can move forward.
While the President is content with TikTok’s acquisitions, other government officials feel that the security threat has not been resolved. In an open letter to the Committee of Foreign Investment in the United States, Senator Josh. Hawley (R-MO) urged a rejection of the Oracle-Walmart deal as a means of resolving TikTok as a security threat. Hawley argued that the same concerns that President Trump had originally raised about the app (censorship, collection of personal information, and disinformation campaigns) continue to “persist today,” and that the Chinese company will continue to put American data at risk. Republican Senators John Cornyn, Marco Rubio, Rick Scott, Dan Sullivan, Thom Tillis, and Roger Wicker are also unhappy with the arrangement, sending a letter to the Trump Administration opposing any deal which allows the China-based company to retain any amount of control over the app. The senators wrote that the partial sale was “insufficient in achieving the goals of protecting Americans and U.S. interests,” and reminded the president that “the Trump Administration has been clear that any proposal must fully protect the data of American citizens and represents a full break with any Chinese-based corporation."
TikTok counters such objections, asserting that the app is, and has been, secure and that the acquisition will benefit Americans. Pappas began the post announcing the deal by noting that the company “strongly disagree[d] with the implications of TikTok as a national security threat,” going on to outline the steps that TikTok had taken to ensure security, including hiring a Chief Security Officer, establishing a Transparency and Accountability Center where code can be viewed, and releasing transparency reports. Now that the deal with Oracle and Walmart is underway, Pappas noted the benefits that TikTok Global would bring to American workers, saying that the company’s headquarters will be in the United States, thus bringing 25,000 jobs to the country. Additionally, U.S. investors currently hold approximately 40% of ByteDance’s equity.
While 2020 appeared to have marked the rise and fall of American TikTokers, this new deal suggests that the app might be here to stay. If the deal goes through, Oracle and Walmart, both American companies, will acquire 20% stake in the company, with Oracle having access to the app’s code. President Trump has spoken in favor of the deal, while other U.S. Senators have expressed dismay and TikTok representatives have argued that there was never a security issue in the first place. Americans will be able to continue to scroll through their TikTok feeds as they await a final verdict of the app’s future in the United States.
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