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Deal could solve TikTok's US dilemma

By HE WEI in Shanghai | China Daily | Updated: 2020-09-21 06:35

Photo taken on Aug 21, 2020 shows a logo of the video-sharing social networking company TikTok's Los Angeles Office in Culver City, Los Angeles County, the United States. [Photo/Xinhua]

ByteDance has voiced hope that an agreement it reached with Oracle and Walmart will allay White House security concerns and allow its video-sharing app TikTok to maintain normal operations in the United States.

The trio hammered out a deal in principle to "strengthen TikTok's business in the US, ensure that 100 million Americans can still continue using the highly popular video and content app TikTok, and meet regulatory requirements by the US administration," ByteDance replied to China Daily in a written statement on Sunday.

The three parties will reach a cooperative agreement, subject to US and Chinese government approvals, as soon as possible, it added. But no details on the governance structure in the deal were disclosed.

In early August, US President Donald Trump said he would ban TikTok in the US unless Byte-Dance sold it to a US company. He later included WeChat in a possible US ban.

ByteDance's confirmation of the deal was quickly followed by a US Commerce Department announcement on Saturday of a one-week delay, until Sunday, on enforcing a US ban on TikTok app downloads.

The Commerce Department attributed the extension to "recent positive developments".

Xinhua News Agency reported on Saturday that TikTok disclosed some details about the three-party agreement, which is being considered by the White House. TikTok said under the deal that Oracle would become its "trusted technology provider" and Walmart would play a role in a "commercial partnership".

The arrangement would leverage the strength of every party and address the US government's so-called security concerns in the most pragmatic way, according to Raymond Wang, a global partner at consultancy Roland Berger.

He said Oracle's expertise in database management and privacy protection, coupled with Walmart's hunger for leapfrogging into the social commerce realm, would "add tangible flavor" to the deal.

"Oracle is likely to act as a trusted technology vendor safeguarding data security, while the retail giant is poised to enjoy a substantial boost by adding a social twist empowered by global best practices-the deal is good for the US economy in real terms," he said.

Shen Yi, a professor and director of the Research Institution of Global Cyberspace Governance at Fudan University in Shanghai, said he believed the deal could serve as a reference point for similar cases.

"Oracle's role as a key technology supplier indicates the TikTok team retains stewardship over the app. Such an approach is applicable to other emerging or future cases involving Chinese tech companies," Shen said.

Wang said the deal is far from the worst-case scenario for TikTok, which could have risked losing control of not just shares but also core technologies like algorithms.

"The current arrangement, if properly implemented, can strengthen localization for Chinese companies to operate overseas and better incorporate local ecosystems from technology channels to partner into its daily operation," he said.

China's Ministry of Commerce condemned the threatened ban and urged the US to stop what it called bullying behavior and wrongdoing. It said China would "take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies."

Chinese messaging app WeChat still faces cloudier prospects. On Friday, it was listed by the US Commerce Department to be barred from mobile app libraries and access to essential internet services in the US.

WeChat owner Tencent said in an emailed statement that it will continue to discuss ways to address concerns with the US government and look for long-term solutions.

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