Latest news with #ProjectTexas
Forbes
28-03-2025
- Business
- Forbes
Trump's Deadline For A TikTok Deal Is Almost Up. Here Are 5 Things To Watch
A phone loading the TikTok app at the foreground with Donald Trump grinning in the background. NurPhoto via Getty Images Next week, the White House is expected to announce a 'high level' deal between TikTok's Chinese parent company, ByteDance, and some group of U.S. investors, to save the app from enforcement of a law, beginning April 5, that bans TikTok in the U.S.. In broad strokes, the deal will reportedly create a new company ('NewCo') to handle TikTok's U.S. operations, which will be majority-owned by U.S. investors — but it won't get rid of ByteDance completely, which might mean it doesn't satisfy the law. Some reports have characterized the deal under consideration as a version of Project Texas, ByteDance's internal name for a set of security protocols it would put in place to keep Americans' data out of Chinese control. The Biden Administration considered a Project Texas proposal in 2023, but was so unsatisfied with it that they ended up working with Congress to pass a law forcing ByteDance to sell TikTok or see it banned in the United States. Under binding U.S. law, TikTok should be banned right now. The only reason it isn't is that President Donald Trump ordered his Department of Justice not to enforce the law until April 5, and asked three of America's largest tech companies — Apple, Google, and Oracle — to knowingly violate it, on the promise that DOJ wouldn't prosecute them. All three have done so. Unless he extends it, Trump's pause on enforcement of the sell-or-ban law comes to an end next week on April 5. That means we can expect further action from the Trump Administration soon. Whether that action will be legal, however, is another matter. So here are 5 questions we'll be asking about any deal they announce. U.S. law prevents 'NewCo' from operating TikTok in the United States if it maintains 'any operational relationship' with ByteDance or any of its subsidiaries. Today, TikTok has an extensive operational relationship with ByteDance: ByteDance controls virtually everything that makes the app run, from its internal databases, documents, and algorithms to its legal and HR departments. NewCo can't have any of that overlap, if it intends to comply with the law. But: the President is the one who gets to decide whether an 'operational relationship' exists or not. So we'll be watching to see if Trump actually prevents ByteDance from meddling in TikTok's operations, or if he just tries to get out of this one by refusing to call a spade a spade. When ByteDance pitched Project Texas to the Biden Administration, it also offered White House officials extensive control over TikTok U.S., including veto power over the hiring of executives and the ability to block changes to the app's privacy and content policies — as Forbes first reported in 2023. Under the agreement, White House staff could claim national security as a rationale for blocking changes to the app's content policies about social issues like abortion, immigration, or the war in Gaza. They could also invoke national security to prevent someone from becoming a TikTok executive. This raises questions about whether the deal would enable the White House to 'jawbone' TikTok, coercing the company into promoting pro-government messages or demoting dissent. Neither the White House nor ByteDance immediately responded to questions from Forbes about whether the deal under current consideration would allow the White House to control content moderation, policymaking, or executive hiring. The deal under consideration will reportedly create a new entity that will be majority owned by U.S. investors. In the proposed deal with the Biden Administration, there was a new entity too — called TikTok U.S.D.S. — but it only had jurisdiction over a narrow subset of TikTok's U.S. operations. Will this NewCo have a broader mandate than the last one? Will it control TikTok U.S.'s internal tools? What about its recommendation algorithm? If NewCo doesn't control these things — and if ByteDance or a ByteDance subsidiary continues to control any of them — then we are back to Question 1. You'd think the answer to this question would be easy: the US investors who take a majority stake in it! But it's not always that simple. When Zhang Yiming founded ByteDance in 2012, he granted himself 'supervoting shares' that would allow him to control ByteDance, even if he didn't continue to own a majority of the company. This is a pretty common maneuver in tech — Meta founder Mark Zuckerberg, former WeWork CEO Adam Neumann and former Uber CEO Travis Kalanick all gave themselves this power too (though it's noteworthy that only Zuckerberg continues to control his company today). If the goal of the TikTok deal is to ensure that TikTok is ultimately not controlled by a Chinese person (who could be forced to act on behalf of the Chinese government), then we'll want to see details on both who owns NewCo and who gets to make decisions for it. If ByteDance is making any of those decisions, then we return to Question 1. ByteDance can't sell TikTok's For You algorithm without the Chinese government's permission. But if ByteDance doesn't sell the algorithm, then NewCo can't (legally) use it. Under U.S. law, NewCo can't engage in 'any cooperation [with ByteDance] with respect to the operation of a content recommendation algorithm.' The only way NewCo will be able to use the For You algorithm is if the Chinese government lets ByteDance sell. Trump has suggested he might lift tariffs if Beijing approves a sale. But Beijing could also hold permission back, in an effort to draw further concessions from the U.S. President. After all, Trump was so eager to avoid a ban he asked American companies to ignore the law to keep TikTok online. Who knows what else he might concede to get a deal.
Yahoo
22-03-2025
- Business
- Yahoo
A Trump plan for TikTok is coming together — and Oracle may play a starring role
Chinese tech giant ByteDance has roughly two weeks to save its video app TikTok from a renewed US ban — and there are signs cloud computing giant Oracle (ORCL) could play a prominent role. ByteDance faces a federal mandate to divest the popular social media app but won a reprieve from President Trump, who, on his first day in office, asked his attorney general not to enforce the law for 75 days. If ByteDance can't find a buyer for TikTok's US operations, the ban passed by Congress will kick in April 5. Vice President JD Vance told reporters this past week that a high-level agreement satisfying US national security concerns by early April was "almost" certain. President Trump said last weekend that four bidders had emerged, but he didn't identify them. Names previously floated by Trump and others have included Microsoft (MSFT), AI startup Perplexity, a coalition of billionaire investors, and even the US government. One prominent corporate name, however, keeps surfacing: Oracle. The tech giant co-founded by billionaire Larry Ellison already acts as TikTok's primary cloud provider and had attempted a prior purchase of TikTok that eventually fizzled during Trump's first term in 2020. The app started routing its US traffic through Oracle's cloud in 2022 in an overhaul known as "Project Texas" that aimed to satisfy US regulatory demands to store Americans' data domestically. Now Oracle is a leading contender to help rescue TikTok from its current predicament, the Information reported this past week. ByteDance's leaders reportedly want to retain a hands-on role with TikTok's operations in any such deal. Bloomberg separately reported that an Oracle deal being mulled by the White House would task the tech giant with safeguarding Americans' data on TikTok in exchange for a stake in the company, while leaving app's algorithm in the hands of ByteDance. TikTok and its CEO Shou Zi Chew have repeatedly objected to letting go of the app's proprietary algorithm. Neither TikTok nor Oracle responded to a request for comment. On Friday, Reuters offered up yet another scenario involving Oracle. The news agency said the biggest non-Chinese investors in ByteDance may increase their existing stakes and acquire the US operations of TikTok as part of a new entity, while Oracle protects the US user data to ensure it is not available to China. These investors include Jeff Yass' Susquehanna International Group and Bill Ford's General Atlantic. In such a scenario, Chinese ownership in the new business would drop below a critical 20% threshold needed to avoid the US ban. "Every day there is another TikTok rumor," Shark Tank star Kevin O'Leary, who is part of a consortium pursuing its own bid for the app's US operations, told Yahoo Finance this past week. But "it doesn't matter what I want or what Larry wants," O'Leary said, referring to Oracle's Ellison. "What matters now is the narrative now between Xi and Trump," referring to Chinese leader Xi Jinping. "The question is, 'Does Xi want to sell TikTok, yes or no?'" TikTok's parent company, ByteDance, operates under Chinese Communist Party law, which requires it to share user data upon request. US intelligence officials have expressed concern that the CCP could use Americans' data against them and use TikTok's algorithm to gain backdoor access to swaths of information on US citizens. To address those concerns, former President Biden signed legislation last April requiring TikTok to divest or face a nationwide ban. The US Supreme Court upheld the law against a constitutional challenge from TikTok and TikTok users. In effect, the statute outlawed app stores — like those run by Apple (AAPL) and Google (GOOG, GOOGL) — and cloud services from offering the app for downloads unless it is controlled by a country that the US does not consider adversarial. The law resulted in TikTok's short-lived shutdown on Jan. 20, Trump's first day back in office. That same day, Trump delayed enforcement of the divestment via executive order. The order, which experts have said is legally dubious, opened a 75-day window for the Trump administration "to determine the appropriate course forward in an orderly way" for TikTok's US business. Trump has said he is open to an extension of the 75-day pause if a deal isn't reached by the deadline. Trump is not empowered to repeal the law; new legislation to overturn the measure would need to be approved by a majority of federal lawmakers. Vance told reporters this past week that "we'd like to get it done without the extension." 'I think the question is, what is the equity ownership of the new joint venture? Vance added. "How do you do the contracts for all the investors, the customers, the service providers? … The deal itself will be very clear, but actually creating those thousands and thousands of pages of legal documents, that's the one thing that I worry could slip.' Trump has sent encouraging signals about Ellison playing a role in the TikTok situation. "I'd like Larry to buy it too," the president said on Jan. 21, with Ellison standing next to him at a press conference held to announce a new $500 billion artificial intelligence infrastructure commitment. "Larry, let's negotiate in front of the media,' Trump said as SoftBank CEO Masa Son and OpenAI CEO Sam Altman also looked on. "What I'm thinking about saying to somebody is, buy it, and give half to the United States of America. Half, and we'll give you the permit. And they'll have a great partner, the United States." "Sounds like a good deal to me, Mr. President," Ellison said. But Trump has also denied talks with Oracle when asked about the subject in late January after NPR reported that the company could be part of a TikTok deal. "No, not with Oracle," he said then, adding that "I never spoke to Larry about TikTok." Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed. Sign in to access your portfolio
Axios
19-03-2025
- Business
- Axios
Why TikTok rivals aren't challenging Trump's executive order
When President Trump issued his executive order to not enforce the TikTok ban for 75 days, it seemed to be in violation of the divestiture law's letter and intent. But so far no one has sued, even though courts have been inundated with complaints over many of Trump's other executive orders. Why it matters: The lack of litigation may give Trump more incentive to further extend TikTok's life, even if a viable deal is not yet in hand. Zoom in: The most obvious plaintiffs would be TikTok's rivals, such as Meta or Snap. The risk, however, outweigh the possible reward. Social media competitors are worried that a successful TikTok ban in the U.S., particularly one rooted in questionable national security arguments, could give cover to other governments that would like to ban social media apps in their countries. Suing also may spark a backlash, eviscerating any user adoption gains. Behind the scenes: Legislators who supported the divestiture bill have also remained (mostly) silent. Republicans due to their steady obsequience to Trump. Democrats because they have bigger fish to fry. And members both parties are understandably worried about how voters would react. It's one thing to vote for a bill, and quite another to loudly insist upon its enforcement. State of play: Oracle reportedly has emerged as a player in the divestiture process, but seemingly as a tech partner that might also take a minority stake. Yes, this is the same Oracle whose "Project Texas" work with TikTok was either brushed off or outright insulted by some Congresspeople during a public hearing with TikTok's CEO. Also the same Oracle that was part of a 2020 proposal, hyped by Trump, that ultimately went nowhere.
