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The political drama surrounding TikTok, the popular Chinese-owned video-sharing app, already seemed to be at a fever pitch in recent weeks: as the clock ticked down on an executive order from Donald Trump that gave the company a deadline to sell the app or be banned, a counter order from the Chinese government prevented TikTok from selling its recommendation algorithm, seen as the app’s “secret sauce.” But as improbable as it sounds, the drama has only intensified—and, in the process, has confirmed that the affair is even more of a craven political game than it appeared to be. As part of a deal designed to get Trump to approve an acquisition and stop short of banning the app outright, Oracle and Walmart have partnered to invest in a new entity that will control the app, and the data will be stored on Oracle’s cloud computing service. But it’s not clear that the way TikTok’s ownership is structured will actually meet Trump’s requirements. Meanwhile, the Chinese government has been making noise about how the whole process is “extortion,” and sources close to the ruling Communist Party say the deal could be rejected even if the US approves it.
According to recent press statements by both Oracle and Walmart, the two companies will take a combined 20-percent ownership stake in a new entity called TikTok Global, which is then expected to issue a public offering of shares. “Americans will be the majority [owners] and ByteDance will have no ownership in TikTok Global,” Oracle’s statement said. TikTok’s current owner ByteDance, however, has said that it plans to continue to own 80 percent of the new entity. That would seem to contradict not just Oracle’s description of the deal, but also Trump’s comments about what he intends to accept. On Monday, he told Fox News that he would not approve a deal between Oracle and the company unless it results in US owners having control over the app. (Trump has also said he expects a $5 billion payment to be made by TikTok’s owners into an educational fund.) Oracle and Walmart “are going to buy it,” he said. “They’re going to have total control over it. They’re going to own the controlling interest. And if we find that they don’t have total control, then we’re not going to approve the deal.”
According to a number of reports on what the proposed acquisition deal actually means, Oracle and Walmart appear to be hoping they can meet the letter of Trump’s demands without honoring their spirit. So while ByteDance might continue to own 80 percent of the global entity, shares in the Chinese company are owned by a number of American venture funds, and that could be interpreted to mean that the US controls TikTok, since those funds would wind up with more than 50 percent of the shares. According to a report by the Washington Post, a person familiar with the deal said the new company would include 36 percent Chinese ownership, including ByteDance’s founder. US investors, including Walmart, Oracle, and American venture capital firms that are investors in ByteDance, would own 53 percent of the new entity, while other non-Chinese international investors would own 11 percent. “There are competing claims [about ownership] because no one is really telling the full story,” Paul Haskell-Dowland, associate dean of computing at Edith Cowan University in Australia, told The Guardian.
ICYMI: Tech journalism’s ‘on background’ scourge
As for China, it’s still not clear whether it wants TikTok to do a deal at all, and as its previous ruling on the sale of the algorithm indicates, it has a lot of sway over what the company can or will ultimately do. According to a report in the South China Morning Post, not long after Trump made his comments to Fox News about American control, Hu Xijin, editor-in-chief of Global Times, a tabloid published by the Communist Party, said on Twitter that Beijing would likely reject the deal “because the agreement would endanger China’s national security, interests and dignity.” ByteDance has also filed a lawsuit asking the court to issue a preliminary injunction delaying the Trump executive order that will block downloads of the app as of this weekend, and block the app completely as of November 21. In addition to arguing that the ban will cause the company “irreparable harm,” ByteDance is asking for an injunction on many of the same grounds that WeChat, another Chinese-owned app, used in its own lawsuit against a similar Trump executive order. WeChat won an injunction on September 19 from a judge in California, who ruled that the ban would harm free speech.
The bans on TikTok and WeChat came into being because the Trump administration argued that both of the Chinese-owned apps pose security risks to the American people. The president’s executive order says that they constitute a “national emergency,” and that they “threaten the national security, foreign policy, and economy of the United States.” Is there any factual evidence that this is the case? Not really. All the administration can say is that the apps’ data collection “threatens to allow” China to “track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.” But as some analysts have pointed out, far more detailed troves of information can be acquired quite easily through private data brokerages, and yet none of these companies have faced any crackdowns or restrictions by the American government. All of which makes the machinations over TikTok’s ownership seem a lot more like a political football rather than an ethical stance on potential digital espionage.
Here’s more on TikTok and the government:
- A crock: Media mogul Barry Diller told CNBC on Tuesday the deal in which Oracle and Walmart would take minority stakes in TikTok “is a crock.” Diller, chairman of Expedia and IAC, made his comments in a Squawk Box interview days after Trump agreed to approve the deal with the Chinese-based owner of the viral video-sharing app. “It started obviously simply — to say we want to protect the security of Americans from anything that could happen to them by using TikTok,” said Diller. “It has now morphed into a ludicrous game-match between tossing ownership here, control there. … Its original aims are out the window. It has just come a whole political mishmash.”
- A lesson: In the New York Times, opinion writer John Herrman says TikTok users in the US are running into something that many users of internet platforms in other countries have come to know well: “A flourishing online social space existentially threatened by diplomatic and political fights between states and corporations, with little input from those affected by their decisions.” Chinese citizens are used to broad bans on foreign platforms including Facebook and Google, he says, and then there are the “occasional national shutdowns of Twitter, Facebook or YouTube during periods of political unrest in many countries around the world, including Egypt, Vietnam, Bangladesh, Sri Lanka, Turkey and others; or the Indian ban on TikTok and other Chinese internet services earlier this year.”
- A mistake: In the MIT Technology Review, tech researcher Graham Walker argues that if the Trump administration was serious about stopping bad actors from abusing personal data from US-based users, “or serious about stopping foreign intelligence agencies from gathering massive datasets describing US society, they would go to the root of the problem: an app economy that collects and monetizes as much data as companies can manage.” The real scandal, Walker says, is not that the Chinese government might exploit personal data, “it’s that doing so is so easy for them and many others, and will remain so even if TikTok and WeChat are banned.”
Other notable stories:
- In an internal memo, Washington Post executive editor Marty Baron warned the paper’s reporters and editors not to get carried away when it comes to handling tantalizing political leaks and party propaganda. For leaked or hacked material, he said, “our emphasis should be on making a sound and well-considered decision—not on speed. We should resist the instinct to post a story simply because a competitor has done so.” And on disinformation, Baron said, “if a candidate amplifies a critique of an opponent that is also being promoted by foreign actors or domestic conspiracy theorists, we should make that clear in our stories.”
- Casey Newton, a popular technology writer (who has appeared on CJR’s Galley discussion platform), is leaving The Verge to run his own newsletter hosted by Substack, which also publishes newsletters from journalists including Emily Atkin, Bill Bishop, and Matt Taibbi. Among other things, Newton told Sarah Jeong that Substack has agreed to cover his legal costs, and is also giving him a stipend to cover his health insurance costs. Meanwhile, the journalists behind Discourse, former members of the Gizmodo Media blog Splinter, said they are leaving Substack to run their own site.
- Four former employees of online auction site eBay have said they will admit they took part in an elaborate scheme to intimidate a blogger critical of the company, according to Bloomberg. The four defendants were lower-level employees and don’t include James Baugh, eBay’s former senior director of safety and security, or David Harville, former director of global resiliency. Both men, who have also been charged, deny any wrongdoing in the case, in which a Boston couple who put out a newsletter were sent a series of disturbing items including a bloody pig mask and a funeral wreath.
- Some journalists believe that NPR reporter Nina Totenberg’s long-term friendship with former Supreme Court Justice Ruth Bader Ginsburg created an obvious conflict of interest, and should either have been forbidden or at least disclosed to readers. “It creates an appearance [of conflict] question,” former Washington Post editor Leonard Downie told the paper. “On the face of it, I’m uncomfortable with it. I’d have to think about removing a reporter from the beat” under similar circumstances. “At the very least, it should be disclosed.”
- Penske Media, the company that publishes Variety and Rolling Stone magazines, said it has formed a partnership with MRC, a media and entertainment company that owns the Hollywood Reporter and Billboard, as well as the rights to shows produced by Dick Clark Productions, including the American Music Awards and the Golden Globes. The new venture will be called PMRC, and the partnership had some media writers decrying what they called the “end of an era” and the consolidation of the Hollywood press.
- April Ehrlich, a reporter with Jefferson Public Radio in Oregon, was reportedly among eleven people arrested by police during a sweep of a park where homeless people were camped. Ehrlich had been on the scene since dawn to cover the anticipated police action, according to a report by JPR, and was arrested on charges of interfering with a peace officer, second-degree trespassing, and resisting arrest. She posted bail and was released Tuesday afternoon. Police said in a statement that officers warned her of the park closure, directing her instead to a “media staging area” at the entrance of the park.
- The New York Times announced that Arthur Ochs Sulzberger Jr., chairman of the board of the company that publishes the newspaper, will step down next year after four decades at the helm of the company and be replaced by his son, Arthur Gregg Sulzberger, who is currently the publisher of the paper, a position he assumed in 2018. The Times has been run by the Ochs-Sulzberger family since 1896, when its patriarch, Adolph S. Ochs, bought the paper in a bankruptcy sale. Arthur Ochs Sulzberger was the fifth publisher in its history.
- According to a report by The Daily Beast, the One America News Network, a conservative television broadcaster that is favored by Donald Trump, is selling custom emojis on its YouTube channel that are designed to appeal to fans of QAnon, the conspiracy theory cult that the FBI has called a terrorist organization. “OAN viewers who pay $4.95 a month to become members of the OAN channel on YouTube can use customized QAnon emojis in OAN’s comment sections, in an apparent attempt to win over QAnon believers,” says the Beast report.
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