ByteDance Faces Major Hurdles on TikTok Deal
After Microsft publicized that it has lost the TikTok deal on technology news, Oracle instantaneously became the hero with red cape among the entertainment app’s users.
As when spectators thought their dilemma is over, the deal is year is yet to overcome another hurdle.
According to former national security officials and regulatory lawyers, parent company ByteDance should convince the White House to keep majority ownership in the popular platform.
The Chinese modern technology company has already submitted a plan to keep a majority stake in TikTok’s global business and create a headquarters in the United States, sources reported.
The proposal is currently under the review administered by the Committee on Foreign Investment in the United States or CFIUS.
In an interview, President Donald Trump asserted his opposition about the deal, saying that he is not happy about ByteDance keeping majority of ownership in TikTok’s US operations.
Should the president approves the deal, he would have to amend the executive order he issued on August 14.
The EO orders the Chinese giant to divest TikTok’s US operations directly. If the firm fails to find an American company willing to take the sale before the deadline, it will be banned indefinitely.
The irony revolves around the fact that CFIUS recommended the president to order an outright divestment.
If the agency approved the sale that is short of what it initially recommended, it would be supporting a deal it personally did not recommend in the first place.
For the record, CFIUS allowed foreign technology firms to keep sensitive assets in the United States.
But along with the approval, it imposed strict oversight and operations on how the firms operate, including giving the US government a say on the board of directors and vendor relationships.
Another Hurdle to Face
ByteDance said China would have to approve its deal with Oracle Corp having a minority stake in the firm.
Earlier in the week, Oracle has already submitted its proposal to the Trump administration to become a technology partner to the current Beijing-based company to stave off the looming ban.
The proposal also highlights TikTok Global to become a US-headquartered firm.
In July, the Chinese government updated its export control rules to have its say over the transfer of technology, saying that no party could force ByteDance to sell TikTok.
The company’s chief executive faced criticisms in his home country for seeming to give in to the US pressure.
After subsequent backlash from his people and threats that millions of users in China would stop using Douyin, the Chinese version of the popular app, Zhang Yiming, reportedly contemplated whether he would award the deal to Microsoft Corp.
The American has been the first company to deliver his interest in acquiring TikTok’s US operations. However, according to sources familiar to the sale, the Nasdaq frontrunner offended Ziming after it referred to TikTok as a security threat it could fix.
Meanwhile, ByteDance’s rival, the Tencent-backed Kuaishou, tops technology news. It aims to raise $5 billion in its initial public offering in Hong Kong to happen in January.
