The logo for ByteDance Ltd's TikTok app is displayed on a smartphone in a long exposure arranged photograph in Sydney, New South Wales, Australia, on Monday Sept14, 2020. (BRENT LEWIN / BLOOMBERG)
Oracle Corp’s closely watched bid for TikTok’s US operations will not only have to pass a US national security review, it’s also going to need to win the blessing of President Donald Trump.
The US government will undertake a two-track national security review of Oracle’s TikTok proposal this week, Treasury Secretary Steven Mnuchin said Monday.
The deal, if finalized, would create what Mnuchin called “TikTok Global.” He added that the unit would have its headquarters in the US and create 20,000 jobs — potentially a move to sweeten the deal as Trump faces what promises to be a hotly contested presidential election in November.
Instead of buying the business outright, Oracle would make an investment in a newly restructured TikTok, people familiar with the proposal said. At least two shareholders in TikTok’s Chinese parent company, General Atlantic and Sequoia Capital, would take stakes in the new business, said one of the people, all of whom asked not to be identified because the terms aren’t finalized. The details could be worked out in the next 48 hours, the person said.
The sale of TikTok — forced by a Trump administration ban on national security grounds due to TikTok’s Chinese ownership — is one of the issues at the heart of the fraying Washington-Beijing relationship. Any deal still requires signoffs from both the US and China.
TikTok confirmed it submitted Oracle’s proposal to Treasury, saying it “would resolve the administration’s security concerns,” according to a spokesperson. Mnuchin said the deadline for a deal, according to Trump’s executive order, is Sept 20.
Trump has also insisted that any sale of the TikTok video app include a cut for the federal government. That demand — which is more akin to a high-stakes real estate deal than a government-ordered divestiture — has baffled policy experts and lawyers who say such a payment would stretch his authority under US law.
A Treasury spokeswoman declined to comment on whether a deal with Oracle will include the fee that Trump has talked about.
Larry Ellison, Oracle’s co-founder and chairman (BLOOMBERG)
Oracle confirmed in a statement Monday it’s part of the proposal submitted by TikTok’s owner ByteDance Ltd to the Treasury Department over the weekend in which Oracle will serve as the “trusted technology provider.”
Oracle edged out rival Microsoft Corp, which had been working with Walmart Inc, and had been seen as the frontrunner, but those talks had cooled in recent days. Oracle rose 4.3 percent to $59.46 in New York.
“We need to make sure that the code is, one, secure, Americans’ data is secure, phones are secure, and we’ll be looking to have discussions with Oracle over the next few days with our technical team,” Mnuchin told CNBC during an interview early Monday.
Oracle has nurtured a relationship with Trump since before his administration began. Oracle’s co-founder and chairman, Larry Ellison, is one of the few Silicon Valley moguls to openly support Trump, who has called him a “great guy,” and voiced support for Oracle’s TikTok bid. Ellison let Trump use one of his California estates to hold a fundraiser in February.
Chief Executive Officer Safra Catz has contributed to Trump’s re-election campaign, served on the president’s transition team and has dined with him at the White House.
The Committee on Foreign Investment in the US, or Cfius, will meet this week before it makes its recommendation to Trump, who will make the final decision. The deal must also go through a separate national security review, he said, in order to comply with Trump’s executive orders last month. That process will be overseen by the Commerce Department.
