The TikTok deal literally resolves nothing – TechCrunch

Well… it was pointless.

After devaluing the idea of ​​free trade in the United States in the name of a misplaced security concern, chained up several multi-billion dollar companies that embarrassed themselves in the interest of naked greed, and demanding that the government gets a cut in profits, TIC Tac The saga that we have been watching over the past few weeks finally seems to be over.

A wave of announcements late Saturday night indicates that the TikTok deal was in fact a politically-oriented shakedown aimed at boosting cloud infrastructure activity by key supporters of the President of the United States.

Oracle, whose cloud infrastructure services are leading a laughable fourth after AWS, Alphabet * and Microsoft, will take a 20% stake in TikTok alongside its partner Walmart in what will be an investment cycle before TikTok Global (like the new entity will be called) goes public on an American stock exchange.

According to a statement from TikTok, Oracle will become TikTok’s “trusted technology partner” and will be responsible for hosting all US user data and securing associated computer systems to ensure that US national security requirements are fully met. satisfied. “We are currently working with Walmart on a business partnership,” according to the TikTok statement.

Meanwhile, Oracle has indicated that any concerns from the White House, the US Treasury and Congress about TikTok have nothing to do with the service’s selection of Oracle as the cloud provider. In its statement, Oracle said, “This technical decision by TikTok was heavily influenced by Zooms’ recent success in moving much of its video conferencing capacity to Oracle Public Cloud.”

Here’s how CNBC reporter Alex Sherman breaks down the ownership structure, by “someone familiar with the subject. Oracle gets 12.5%, Walmart 7.5%, and ByteDance gets the remaining 80%. Trump administration says U.S. investors will own 53% of TikTok because ByteDance (TikTok’s parent company) is backed by venture capitalists who have a 40% stake in the parent company.

The deal benefits everyone except American consumers and people who have genuine security concerns about TikTok’s algorithms and how they can be used to influence opinion in the United States. .

TikTok’s parent company ByteDance retains ownership of the US entity, Oracle gets huge new cloud client to boost struggling business, Walmart has access to teens to sell products, and US customer data is not safer American predators instead of foreign predators).

To be clear, privacy and data security is a major concern, but it’s not necessarily a concern when it comes to TikTok (and furthermore, the Chinese government has probably already acquired all the data it wants on US customers).

For many observers, the real concern with TikTok was that the company’s Chinese owners might be pressured by Beijing to manipulate its algorithm to promote or remove content. Businesses in China, including its internet giants, must follow suit the national cloud intelligence and security law requiring full compliance with all government data controls.

Department of Commerce in his statement said that “in light of recent positive developments, Secretary of Commerce Wilbur Ross, under the leadership of President Trump, will delay the ban on identified transactions under Executive Order 13942, related to the TikTok mobile app which would have been effective Sunday, From September 20, 2020 to September 27, 2020 at 11:59 pm ”. So it’s a week of respite.

So all this noise and fury for what? The best ROI in all this shenanigans is almost certainly the Oracle co-CEO. Safra Catz ‘ investment in Trump, who in addition to being a big donor to the Trump administration, also joined the presidential transition committee in 2016. Thank goodness the United States saved TikTok from China’s crony capitalism. Let’s just hope they enjoy Washington DC’s crony capitalism.

* An earlier version of this article referred to AWS, Amazon, and Microsoft. AWS and Amazon are the same company. I was typing fast. I corrected the error.