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Arjun Kharpal
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ByteDance will not transfer algorithms and technologies to Oracle as part of a
deal announced over the weekend to keep social media app TikTok operating
in the U.S.
Oracle will have the “authority to check the source code of TikTok” in the U.S.
President Donald Trump said he approved a deal on Saturday that will see the
creation of a U.S.-headquartered firm called TikTok Global with Oracle and
Walmart taking minority stakes.
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9/21/2020 TikTok deal: ByteDance says it will not transfer algorithm to Oracle
The logos of the Chinese video portal TikTok and the US software and hardware manufacturer Oracle Corporation can be
seen on a smartphone and screen on September 14, 2020 in Berlin, Germany.
Thomas Trutschel | Photothek | Getty Images
President Donald Trump said he approved a deal on Saturday that will see the
creation of a U.S.-headquartered firm called TikTok Global with Oracle and Walmart
taking minority stakes. Oracle will become TikTok’s secure cloud provider and host
U.S. user data.
But the deal does not entail any transfer of algorithms and technologies, according to
a statement from ByteDance on Monday. The company said Oracle can instead
check the source code.
“The current plan does not involve the transfer of any algorithms and
technologies. Oracle has the authority to check the source code of TikTok USA,”
ByteDance’s statement said, according to a CNBC translation.
Source code forms the basis for applications and software. Allowing inspections of
source code is common practice to address local data security concerns.
TikTok’s recommendation algorithm has been a key driver behind its growth,
helping to suggest other videos to users and keep them hooked within the app.
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9/21/2020 TikTok deal: ByteDance says it will not transfer algorithm to Oracle
VIDEO 07:58
What is ByteDance?
ByteDance also confirmed that it would do a small round of pre-IPO (initial public
offering) financing. TikTok Global will become an 80% holding subsidiary of
ByteDance as a result, giving it majority control. As part of the Oracle and Walmart
deal, the companies said they would work toward a public listing in the U.S. within a
year.
Over the weekend, Trump said the new TikTok Global will “have nothing to do with
any outside land, any outside country, it will have nothing to do with China. It’ll be
totally secure. That’ll be part of the deal.”
Last month, as the TikTok deal appeared to be coming to a conclusion, China threw a
spanner in the works by updating its list of technologies subject to export restrictions.
One of the technologies on the list related to recommendation algorithms. After
Beijing made this move, ByteDance said it would comply with the rules.
In August, Trump issued an executive order that would have banned transactions
with ByteDance and effectively shut down TikTok in the U.S. That was set to come
into effect on September 20. But the Department of Commerce said in a statement
that it has delayed that by a week.
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9/21/2020 TikTok deal: ByteDance says it will not transfer algorithm to Oracle
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9/21/2020 TikTok deal: ByteDance says it will not transfer algorithm to Oracle
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