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A TikTok deal has been done in the US – but while the legal drama may have concluded, the dystopian horror story has only just begun, writes Elaine Burke.
It’s over. There are still government approvals to come, but for the most part TikTok has reached a deal that will see its operations continue in the US.
The terms announced will see US companies Oracle and Walmart take a combined 20pc stake in the newly formed TikTok Global. This US-based business is expected to hire up to 25,000 people in its new all-American base, which is likely to be in Texas. By the time it becomes a public company in the next 12 months, all involved will have done well out of the deal.
Except, of course, TikTok’s users, data privacy advocates, champions of ethical business and, quite possibly, American society as a whole.
Smoke and mirrors
The truth of the TikTok deal is not the narrative being spun by US president Donald Trump, whose supporters will make off with the spoils while privacy concerns are left unchecked in an arrangement that gives a retail giant direct access to a young market.
The Trump administration is framing this story with smoke and mirrors. While it’s widely reported that this deal will make TikTok Global a primarily US-owned company, others are questioning the maths.
So, plot twist! It appears that ByteDance retains majority stake in the new company, despite the president's claims. Some claim the new company has 53% American ownership, but that's only when you count ByteDance's underlying American investors, who will not have a direct stake https://t.co/ELdNQdLEHa
— Ana Swanson (@AnaSwanson) September 20, 2020
Then there’s the pretence that this deal has somehow addressed the original accusations made against TikTok as a threat to national security. Oracle has been granted oversight of the app’s source code and will be expected to verify and vouch for its security, but will that mean changes to TikTok’s data practices or simply a transfer of power?
And if TikTok was ever truly a backdoor for Chinese spying, what will stop it being the same for the US? “Thank god the US saved TikTok from the crony capitalism of China. Let’s just hope they enjoy the crony capitalism of Washington DC,” wrote TechCrunch’s Jonathan Shieber.
Communication breakdowns
This is of concern to users around the world, too. For weeks this story has focused on how TikTok would continue to serve North American users, but what scant details we have on the establishment of TikTok Global suggests a wider impact. “TikTok Global … will be responsible for providing all TikTok services to users in United States and most of the users in the rest of the world,” is a worryingly broad description provided by Walmart and Oracle.
That said, there are plenty of red flags signalling that this deal was rushed out under pressure and all parties concerned may still be catching up on the details. An earlier release from Walmart also added the enlightening “Ekejechb ecehggedkrrnikldebgtkjkddhfdenbhbkuk” to its statement – a flub in the flurry spotted by The New York Times.
‘Imagine the power of TikTok’s platform now beholden to the US government being used to re-educate the youth of this nation with what Trump calls “the real history of our country”’
In a week with intensive hand-wringing over the ways in which advanced technology such as deepfakes might destroy any concept of truth in online media, Trump reminded us all that you don’t need to be high tech to be thoroughly misleading.
Speaking about the deal to the press, he appeared to conflate an anticipated $5bn in tax dollars from the establishment of TikTok Global (which would be entirely contingent on the company’s performance) with an alleged donation for a sinister-sounding education fund.
While Occam’s razor tells me it’s most likely that Trump misspoke and there is now a scramble to retroactively turn a misstatement into a truth, the idea still raises a terrifying concept. Imagine the power of TikTok’s platform now beholden to the US government being used to re-educate the youth of this nation with what Trump calls “the real history of our country”.
Dangerous precedents
Even without that truly dystopian vision, the immediate outcomes of this deal are far from positive.
In the end, the unidentified security concerns have now been addressed with an unidentified solution, and ByteDance is keeping the all-important tech that is so precious to the platform. So what was it all for?
I’d like to say, in tune with amateur dramatics of the past months, that all of this was a tale told by an idiot, full of sound and fury, signifying nothing. But, unfortunately, it does signify something rotten in the state of the US.
The American leader has used extraordinary measures given by his office to bully a company into a deal that will be hugely beneficial to his supporters.
Oracle, in its official statement, would like us to believe that it is TikTok’s cloud provider of choice because of its technical prowess. But despite having had a headstart in this sector, Oracle’s cloud business has been eclipsed by its competitors. Having a flagship client in the next big thing in social media, however, could turn those fortunes around.
TikTok itself was so unhappy with lack of due process in the actions taken against it in recent months that the company is currently suing the US government. After the weekend’s announcements, that case is likely to be dropped, but it still serves as compelling evidence that the company did not walk into this deal willingly.
And who stands to benefit? A company co-founded by one of Trump’s campaign fundraisers and led by a member of his 2016 transition team.
‘TikTok is set for a juicy initial public offering that will luxuriously line the pockets of all involved’
In the coming year, TikTok is set for a juicy initial public offering that will luxuriously line the pockets of all involved, though any success can’t paper over the stain this deal marks on business practice in the US.
The deal is also far from a successful end to trade tensions between the US and China. The US is now being accused by China of following a pattern of “using security as an excuse to exercise control over the internet” and this approach to international trade could have a domino effect now it has proven results. Already, China has come out with its own blacklist for foreign companies, mimicking the US’s earliest moves in this battle.
What’s more, Trump has learned that he can exert control over platforms he doesn’t like. The petulant president’s targeting of TikTok followed the campaign by TikTokkers to leave him red-faced at a sparsely populated campaign rally. If he secures a second term on the back of this ‘victory’, what does this mean for the next platform to displease him?
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