President Donald Trump spent several months pushing to have TikTok banned or sold to a US firm. He seems to have gotten his way, as Oracle confirmed it struck a deal with ByteDance over TikTok. That transaction, however, does not necessarily assuage the White House’s stated concerns with the popular video app—and the deal has a long way to go, in a short period of time, before it’s done.

The specific terms of the agreement have still not been made public. The arrangement is not the full sale that Trump was pushing for as recently as last Friday. China’s export ban on machine learning and artificial intelligence algorithms prevented that kind of direct acquisition.

Oracle has said very little about the transaction, which first leaked late on Sunday. Monday morning, the company confirmed it submitted a proposal to become ByteDance’s “trusted technology provider” to the Treasury Department for review over the weekend of September 12-13. Tuesday morning, it repeated the statement as part of a filing with the US Securities and Exchange Commission.

Treasury, you’re up

US Treasury Secretary Steven Mnuchin spoke with CNBC about the next steps for the transaction on Monday. Mnuchin did not discuss details of the transaction but repeated that Oracle is the “trusted technology partner.” He added that Oracle made “many representations for national security issues” as well as a promise “to create TikTok Global as a US-headquartered company with 20,000 new jobs.”

The proposal has been kicked to Treasury because that’s where the Committee on Foreign Investment in the United States, or CFIUS, is housed. CFIUS, composed of members from more than a dozen different agencies, conducts national security reviews on transactions in which a foreign business acquires part or all of a US business. The proposed Oracle transaction is sort of the opposite—a US firm is investing in a foreign platform—and might not ordinarily go through CFIUS review. The committee, however, has been heavily involved in the entire TikTok saga to date.

CFIUS last fall began a retroactive review of TikTok, which was formed when ByteDance acquired US firm Musical.ly and rebranded it. The White House ended that review on August 14 with an executive order (PDF) declaring that the Musical.ly acquisition was indeed a national security threat and retroactively prohibiting the acquisition and requiring CFIUS to oversee some kind of divestment process.

“The deadline is September 20,” Mnuchin told CNBC, although Trump has several times declared the deadline to be September 15. Between now and then “there are two processes that we’re going through. One is the CFIUS review, the other is the national security review under the president’s executive order… We will be reviewing that at the CFIUS committee this week, and then we will be making a recommendation to the president and reviewing it with him.”

When asked specifically about the national security threats of TikTok’s proprietary algorithms, which may not end up being part of the deal after all, Mnuchin did not directly answer the question. Instead, he said, “From our standpoint, we’ll need to make sure that the code is secure, that Americans’ data is secure, that the phones are secure, and we’ll be looking to have discussions with Oracle over the next few days with our technical teams.”

Pushback

Trump advisors are split on whether the administration should accept the Oracle deal or pursue more stringent action, The Wall Street Journal reports. According to the WSJ, Mnuchin supports the Oracle deal and secured the support of Commerce Secretary Wilbur Ross before the weekend. The WSJ did not name the “China hawks” inside the White House who reportedly oppose the deal. There are, however, Republicans outside of the White House who are openly asking CFIUS to prohibit the transaction.

Sen. Josh Hawley (R-Mo.), who often speaks out on technology issues, urged regulators to block the deal.

“The available evidence compels only one conclusion: ByteDance has no intention whatsoever of relinquishing ultimate control of TikTok,” Hawley wrote in a letter to Mnuchin (PDF).

The deal “is completely unacceptable, and flatly inconsistent with the President’s Executive Order of August 6,” Hawley wrote, concluding that a full sale or an outright ban would be preferable. “CFIUS should promptly reject any Oracle-ByteDance collaboration and send the ball back to ByteDance’s court so that the company can come up with a more acceptable solution.”

Sources this morning told CNBC, however, that the White House wants to fast-track approval and that an announcement giving the deal a green light may come as soon as today.

https://arstechnica.com/?p=1706152