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US-China tensions overshadow closing of Oracle-ByteDance deal

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US software giant Oracle has agreed with Beijing-based ByteDance to control local operations of its subsidiary TikTok, the short-form video-sharing platform with 100 million US users. However, the proposed deal still faces the possibility of rejection by the US government.

Demands from President Donald Trump that TikTok must be quickly sold to a US company or face a nationwide ban sparked frantic talks between TikTok parent company ByteDance and US companies, including Microsoft, Twitter, Walmart and Oracle. These talks have been disrupted by complications, including Trump's insistence that the US government should receive a financial "cut" of any deal.

In recent days Microsoft confirmed that its offer to purchase TikTok had been rejected, with Oracle emerging as ByteDance’s chosen candidate.

Under these proposals, Oracle would become a “trusted technology provider” for TikTok’s US operations. It would manage TikTok’s US user data and claim a stake in its US operations.

While falling short of the outright acquisition of TikTok’s US operations favoured by anti-China hawks, this agreement could be satisfactory to Trump due to his key concern being the possibility of the company funnelling US user data to the Chinese government (allegations which TikTok has denied). The good relationship between the White House and Oracle co-founder and chair Larry Ellison – a rare pro-Trump voice in Silicon Valley – could also help secure the deal.

However, six Republican Senators, including Marco Rubio, have written to Trump calling on him to block any deal under which TikTok remains tied to ByteDance. Senator Ted Cruz has also written to Trump separately, arguing that the proposed deal “failed to meet the intent of [his] executive orders” and “raises serious national security concerns”.

The deal must be approved by the Committee on Foreign Investment in the US and any recommendation from the panel can subsequently be rejected by the President.

This week, Trump raised concerns about ByteDance’s plans to maintain a majority stake in TikTok’s US operations, telling a press conference: “Conceptually, I can tell you I don’t like that. I’m not prepared to sign off on anything. They’re going to be reporting to me […] and I’ll let you know.”

The White House has said that a decision on the deal will be made soon.

The Chinese government has previously indicated that it would need to provide approval for the deal to go ahead. However, Reuters has reported that newly imposed export control rules – which require companies to obtain licenses before exporting certain critical technologies – would not apply to the TikTok content recommendation algorithm.

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