The logo of the Chinese video portal TikTok and the American manufacturer of software and hardware Oracle Corporation can be seen on a smartphone and screen on September 14, 2020 in Berlin, Germany.
Thomas Trutchel Photo library Getty images
GUANGZHOU, China – ByteDance will not transfer algorithms and technologies to Oracle as part of a deal announced over the weekend to continue TikTok̵
President Donald Trump has said he has approved a deal on Saturday that will form a US-based company, TikTok Global, with Oracle and Walmart, which hold minority stakes. Oracle will become TikTok’s secure cloud provider and host US user data.
But the deal does not involve any transfer of algorithms and technologies, a statement from ByteDance said on Monday. The company said Oracle could check the source code instead.
“This plan does not include the transfer of any algorithms and technologies. Oracle has the authority to verify the source code of TikTok USA,” the ByteDance statement said, according to a CNBC translation.
The source code forms the basis for applications and software. Allowing source code checks is a common practice for dealing with local data security issues.
TikTok’s recommended algorithm is a key driver for its growth, helping to offer other videos to users and keep them in the app.
ByteDance also confirmed that it will make a small round of funding before the IPO (initial public offering). As a result, TikTok Global will become an 80% holding subsidiary of ByteDance, giving it majority control. As part of the deal for Oracle and Walmart, the companies said they would work for public release in the United States for up to a year.
Over the weekend, Trump said the new TikTok Global “has nothing to do with any foreign land, any foreign country will have nothing to do with China. It will be completely safe. It will be part of the deal.”
TikTok’s majority ownership of Beijing-based ByteDance seems to contradict that. But ByteDance is 40% owned by US venture capital firms, so the Trump administration can technically claim that TikTok Global is already owned by US money.
Last month, as the TikTok deal seemed to be coming to an end, China put a wrench on, updating its list of technologies subject to export restrictions. One of the technologies on the list is the recommended algorithms. After Beijing made the move, ByteDance said it would follow the rules.
Washington claims that TikTok poses a threat to national security because it collects data on American consumers that can be accessed from Beijing. TikTok has repeatedly denied this, saying it stores US data in the United States with a backup in Singapore.
In August, Trump issued an executive order that would ban transactions with ByteDance and effectively close TikTok in the United States. This was to take effect on September 20. week.