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TikTok: Technology Overview and Issues range of $20 billion to $30 billion.35 Twitter and Google were also rumored to be interested in acquiring the app.36 On September 13, 2020, Microsoft announced that its bid had been rejected by ByteDance. In its announcement, the company stated, “We would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combating disinformation.” One expert, Alex Stamos, Director of the Stanford Internet Observatory, commented that this statement is “an attempt to poison the well against an Oracle deal where they only take over hosting. And [Microsoft] is right to do so.”37 On September 14, 2020, Oracle announced that it had reached an agreement with ByteDance to “serve as [the company’s] trusted technology provider” in the United States. Treasury Secretary Steven Mnuchin announced that he had received the proposal.38 From the terminology used, it appears that the deal may involve a partnership rather than a sale, with TikTok using Oracle’s cloud hosting services.39 This arrangement would keep the source code of the For You feed and algorithmic recommendation engine in the hands of ByteDance. Secretary Mnuchin said that CFIUS will review the proposal and present President Trump with its opinion. On September 19, 2020, Oracle announced that Walmart would join its bid for TikTok, with the two companies acquiring 20% of a newly formed company, TikTok Global,40 with the remaining 80% owned by ByteDance. According to announcements made by the companies, 40% of ByteDance is owned by U.S. investors, which is meant to indicate that the new company would be under majority U.S. ownership.41 However, this arrangement, along with TikTok keeping the For You recommendation engine algorithm,42 would not appear to satisfy conditions in President Trump’s Executive Orders. In addition to U.S. approval of the proposal being uncertain given its provisions, Chinese approval of the proposal is also uncertain. China’s new export regulations 35 In addition to U.S. companies making a bid for TikTok in the United States, Centricus Asset Management and Triller are reported to have made a bid to buy TikTok’s operations in several other countries for $20 billion. 36 Kim Lyons, “Twitter and TikTok Reportedly Have Had Talks About a Deal,” TheVerge.com, August 8, 2020, at https://www.theverge.com/2020/8/8/21360259/twitter-and-tiktok-acquisition-trump-microsoft. 37 The Stanford Internet Observatory, a program of the Cyber Policy Center of the Freeman Spogli Institute for International Studies, is a cross-disciplinary program of research, teaching, and policy engagement for the study of abuse in current information technologies, with a focus on social media. Prior to his current position, Mr. Stamos served as Chief Security Officer of Facebook and Chief Information Security Officer at Yahoo. He has also been involved with securing the U.S. election system as a contributor to Harvard University’s Defending Digital Democracy Project. 38 Jordan Novet, “Oracle Confirms Deal with Tiktok-Owner Bytedance to Become ‘Trusted Technology Provider’,” CNBC.com, September 14, 2020, at https://www.cnbc.com/2020/09/14/oracle-confirms-deal-with-tiktok-owner- bytedance-to-become-trusted-technology-provider.html. 39 Larry Dignan, “With TikTok, Oracle Hopes Its Cloud Infrastructure Business Goes Viral,” ZDNet.com, September 21, 2020, at https://www.zdnet.com/article/with-tiktok-oracle-hopes-its-cloud-infrastructure-business-goes-viral/. 40 “Walmart Statement About Potential Investment in and Commercial Agreements with TikTok Global,” Walmart, September 19, 2020, at https://corporate.walmart.com/newsroom/2020/09/19/walmart-statement-about-potential- investment-in-and-commercial-agreements-with-tiktok-global. 41 Jordan Novet, Spencer Kimball, and Alex Sherman, “Trump Agrees to Tiktok Deal with Oracle and Walmart, Allowing App’s U.S. Operations to Continue,” September 22, 2020, CNBC.com, at https://www.cnbc.com/2020/09/19/ trump-says-he-has-approved-tiktok-oracle-deal-in-concept.html. 42 Isobel Asher Hamilton, “TikTok’s Deal with Oracle and Walmart Lets It Cling on to Its Most Valuable Asset—Its Algorithm,” BusinessInsider.com, September 21, 2020, at https://www.businessinsider.com/tiktok-deal-lets-it-hold- onto-algorithm-2020-9. Congressional Research Service 7PDF Image | TikTok: Technology Overview and Issues Updated October 21, 2020 Congressional Research Service
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