09192020What's Hot:

Trump’s TikTok power play may fall short

President Donald Trump aimed for a clear-cut win over China when he demanded that TikTok’s Beijing-based parent sell the popular video-sharing app to an American company or be banned from operating in the United States.

Now he may have to settle for less.

Advertisement

The proposal put before his administration this weekend wouldn’t sell the company outright. It’s unclear if it will resolve national security concerns about China’s access to data on TikTok’s 100 million U.S. users, or Chinese control of the algorithm that fuels the app. And the deal came together only after Beijing pulled a power move of its own, by expanding its authority to veto transactions that give up Chinese intellectual property.

The president must now decide whether to accept the proposed deal, which would create a tech partnership between TikTok and Oracle, a California-based company closely aligned with Trump. If he rejects it, TikTok could have to cease doing business in the U.S. come Sunday under an order he signed last month.

Terms of the proposal were still unclear Monday, although Treasury Secretary Steven Mnuchin said they came with a promise of creating thousands of new American jobs. Also undefined: whether the companies will meet Trump’s demand in August that the U.S. Treasury be “well compensated” for making the deal possible.

The outcome has symbolic importance for Trump, who has portrayed his reelection as crucial for U.S. hopes of countering China’s rise to global dominance.

“You have the president wanting to be tough on China, not wanting to back down on this ban threat, and so he’s kind of painted himself into a corner,” said Paul Triolo, a longtime government analyst who now heads the Eurasia Group’s geo-technology practice. Meanwhile, he noted, Xi Jinping’s government has no desire to be seen “allowing Washington to dictate the sale of a big, important Chinese tech company.”

“This isn’t something that can be solved with the political wave of a magic wand,” Triolo added. “The details are going to have to make sense to both sides.”

One of Trump’s congressional allies, Sen. Josh Hawley (R-Mo.), urged the administration to “promptly reject” the proposal, saying it fails to satisfy concerns about China’s influence over the app.

“An ongoing ‘partnership’ that allows for anything other than the full emancipation of the TikTok software from potential Chinese Communist Party control is completely unacceptable,” Hawley said.

TikTok has denied that it’s tied to the Chinese government and has said it would refuse any request by Beijing for its users’ data.

Oracle and ByteDance have disclosed no details of the deal. But they confirmed Monday that they’ve put forward a proposal for TikTok’s future in the U.S. that must now win the Trump administration’s blessing.

That could be a difficult sell, China watchers warned. Accepting anything short of a sale would contradict Trump’s own demands for TikTok. Just Thursday, he told reporters that the company had two options: “We’ll either close up TikTok in this country for security reasons or it’ll be sold.”

China hawks say that choice was based on the notion that TikTok’s data would be safer in the hands of a U.S. company. So any deal that doesn’t resolve the underlying fear about U.S. data being funneled to Beijing shouldn’t win the president’s approval.

“If the plan as described for Oracle doesn’t meet that objective, then it shouldn’t go forward,” said Klon Kitchen, director of the Center for Technology Policy at the Heritage Foundation. “The idea of selling to a U.S. company, that was just one of the solutions short of just an outright ban, but the sale itself to U.S. company isn’t the objective.”

Mnuchin told CNBC on Monday that the administration received a proposal over the weekend that purports to address security concerns and, among other provisions, would create a global headquarters for TikTok in the U.S. and generate about new 20,000 jobs. TikTok now runs its U.S. business from Los Angeles and previously pledged to create 10,000 jobs in the U.S. over three years.

Mnuchin said the Committee on Foreign Investment in the U.S., an interagency group that examines business deals for national security implications, will review the proposal this week and plans to make a recommendation to Trump.

Mnuchin said the administration’s priority remains protecting the data of TikTok’s U.S. users from being passed along to the Chinese government. “We’ll be looking to have discussions with Oracle over the next few days with our technical teams,” he said.

The arrangement with Oracle first came to light Sunday after Microsoft announced that ByteDance had rejected its competing bid to acquire TikTok’s U.S. operations. Microsoft previously said it had been in talks to acquire TikTok since earlier this summer, and CEO Satya Nadella spoke with Trump in early August to convince him of the sale’s merits.

Just days later, Trump issued an executive order requiring ByteDance to cease transactions in the U.S. effective Sept. 20 because of concerns about its ties to the Chinese government. He later signed a separate executive order giving the company 90 days to sell TikTok to a U.S. company, adding that the deal would need the administration’s approval.

As negotiations between ByteDance and potential suitors were underway, the Chinese government issued regulations of its own. The Ministry of Commerce added algorithms and artificial intelligence technologies, such as those that power TikTok, to an export control list, meaning the government must approve any sale before it can be completed. The Chinese government has since indicated via state media reports that it would not support a forced sale of TikTok to a U.S. buyer.

The Chinese government hasn’t said whether it consented to the Oracle deal, though ByteDance has said it would “strictly comply” with Chinese regulations.

The deal would have one advantage going for it in Washington: In selecting Oracle, ByteDance has picked a partner that has made no qualms about cozying up to the Trump administration. Even as other Silicon Valley heavyweights kept interactions with the president to a minimum, Oracle executives have become close allies of the president and helped fuel his reelection campaign.

Oracle’s billionaire chair, Larry Ellison, hosted a high-dollar fundraiser for Trump in February at his Rancho Mirage, Calif., home and the company’s CEO, Safra Catz, shelled out $ 125,000 to back the president’s re-election effort in May, campaign finance records show.

Trump’s actions come amid broader political and economic tensions with China that have dominated Trump’s time in office and become crowd-rousing rhetoric on the campaign trail. He has touted a trade deal with China as a key success of his administration and blamed Beijing for the United States’ failure to grapple with the coronavirus pandemic, which Trump has repeatedly called the “China virus.”

“I took the toughest-ever action to stand up to China’s rampant theft of American jobs,” Trump said at a Nevada rally Sunday night, while adding a shot at Democratic challenger Joe Biden. “Biden’s agenda is made in China. My agenda is made in the U.S.A.”

The TikTok deal is the latest result of Trump taking aim at a Chinese technology company from the Oval Office based on accusations that its ties to the government pose a national security threat.

Trump has achieved some success driving the Chinese telecom giants Huawei and ZTE out of U.S. wireless networks and pressuring American allies not to use Chinese-made gear for next-generation 5G networks. He also issued an executive order Aug. 6 banning transactions with the messaging app WeChat, which is owned by the Chinese conglomerate Tencent.

“This administration has been somewhat trigger happy on the use of executive orders to target Chinese companies and I think going into November, going into the election, we are going to see more and more sanctions against Chinese companies,” said Samm Sacks, a cybersecurity policy and China digital economy fellow at New America, a Washington-based think tank.


Source: Politics, Policy, Political News Top Stories

comments powered by HyperComments

More on the topic