Donald Trump has raised concerns about the deal Oracle struck with ByteDance to operate TikTok in the US, saying he would not be happy if it allowed the Chinese technology group to retain a majority stake in the new company.
“Conceptually . . . I don’t like that,” the US president said. “It hasn’t been told to me . . . If that’s the case, I’m not going to be happy with that.”
The Financial Times reported earlier this week that Oracle would enter into a technical partnership with ByteDance, which would become the majority shareholder in a new US-headquartered company.
Mr Trump in August threatened to ban TikTok over concerns that the Chinese government could use the short-video app to gain access to the data of US citizens. He gave ByteDance until September 20 to sell the app to an American company or face a ban on operating in the US.
The Committee on Foreign Investment in the US, an intra-agency panel that can block deals on national security grounds, is examining the proposal.
Mr Trump said he had not been shown the details of the deal but would be briefed about the situation on Thursday. “It has to be 100 per cent as far as national security is concerned,” he said.
People involved in the negotiations said they were confident that their proposal would assuage national security concerns.
According to two people involved in the talks with the government, the officials who support the deal include Steven Mnuchin, Treasury secretary, and commerce secretary Wilbur Ross. They also include attorney-general William Barr and Jared Kushner, the president’s son-in-law and adviser.
Mike Pompeo, the secretary of state and a hardline China hawk, has not provided his view because he had questions about the details of the deal, according to the people familiar with the situation.
They added that no government officials had expressed qualms to ByteDance and Oracle about the Chinese company having a majority stake. They said the talks were focused on ensuring bulletproof measures to protect the private data of US citizens and make sure national security was not undermined.
Under the deal, TikTok would create a board and security committee composed of American nationals that would have to be approved by the US government, said two people with direct knowledge of the plan.
The security committee, which will be led by an individual with the appropriate government security clearances, would oversee data privacy, cyber security and national security matters, the people added.
The security committee, which will be the point of contact for Cfius, would submit regular audits on security matters to the US government. It would also ensure that restrictions imposed on ByteDance over the management of TikTok in the US are enforced in accordance with the agreement.
Oracle would retain full oversight of ByteDance’s algorithm, which underpins TikTok, said two people with direct knowledge of the matter. Any technical update developed by ByteDance for TikTok would be tested by Oracle to ensure that no backdoors were introduced to spy on US citizens, they added.
The proposal has sparked concern on Capitol Hill. Marco Rubio, a Florida senator, and five of his Republican Senate colleagues said in a letter to Mr Mnuchin that Mr Trump should not approve any deal that allowed a Chinese company to maintain control of the critical algorithm.
“We remain opposed to any deal that would allow China-based or controlled entities to retain, control or modify the code or algorithms that operate any US-based version of TikTok,” Mr Rubio wrote.
However, any export of ByteDance’s algorithm would require approval from Beijing, under new regulations that analysts have interpreted as the Chinese government’s red lines for a TikTok deal.
ByteDance said in a statement on Thursday that none of the proposals under discussion involved selling their business or technology, adding any deal would have to be approved by Chinese regulators.
Mr Trump previously insisted that any deal would have to include a direct payment to the Treasury, but the FT reported this week that the idea had been dropped.
The president said on Wednesday he had been stunned to learn from lawyers in his administration that there was no legal mechanism to enable the government to receive such a payment.
“Amazingly, I find that you’re not allowed to do that,” Mr Trump said. “They’re willing to make a big payment to the government and we’re not allowed to take the money . . . How foolish can we be?”
Additional reporting by Yuan Yang in Beijing
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