TikTok’s future in the US: all of the news about Microsoft’s deal and Trump’s ban threats

President Joe Biden signed an executive order Wednesday revoking the Trump-era bans on TikTok and WeChat. In place of the Trump order, Biden will direct the commerce secretary to investigate apps with ties to foreign adversaries that may pose a risk to American data privacy or national security.

The order takes the place of a series of executive orders instituted by President Trump last year, which blocked apps like TikTok, WeChat, and Alipay from US app stores and took further measures to prevent them from operating in the US. The most extreme effects of those orders were forestalled by ongoing court challenges, but Wednesday’s order will revoke the orders outright. Instead, Biden’s order will institute a new framework for determining the national security risks of transactions that involve apps that are connected to the governments or militaries of foreign adversaries, like China, or collect sensitive data from US consumers.

The Trump administration won’t enforce its own deadline for ByteDance to sell or spin out video-sharing platform TikTok’s business in the US, according to Bloomberg.

The latest deadline for that move, given by the Committee on Foreign Investment in the United States (CFIUS) on November 28th, was today, December 4th. An extension isn’t expected, though the current deadline will “be overlooked while the discussions continue” between the Trump administration and TikTok, Bloomberg reports.

TikTok has filed a petition in a US Court of Appeals calling for a review of actions by the Trump administration’s Committee on Foreign Investment in the United States (CFIUS). The reason, according to the company, is that it hasn’t heard from the committee in weeks about an imminent deadline for parent company ByteDance to sell off US assets over national security concerns.

The CFIUS set the deadline of November 12th for TikTok to divest itself of “any tangible or intangible assets or property, wherever located, used to enable or support ByteDance’s operation of the TikTok application in the United States.” TikTok says it applied for a 30-day extension that was allowed for in the CFIUS’ order, but hasn’t received any communication on the matter. It’s not clear what would actually happen if the deadline passed; TikTok was granted a preliminary injunction against it late last month.

Oracle CEO Larry Ellison donated $250,000 to a super PAC supporting Sen. Lindsey Graham’s (R-SC) reelection campaign as his company closed in on a coveted position as TikTok’s US technology partner.

FEC documents show that Ellison made the $250,000 donation to the Security is Strength PAC on September 14th. The Security is Strength PAC has bought ads exclusively in support of Graham’s political ambitions, including his 2015 presidential campaign and his current reelection bid for the US Senate. 

TikTok’s chief security officer says in new court documents that the US Commerce Department has mischaracterized how the app stores and secures user data, as the company renews its motion for a preliminary injunction against the Trump administration’s looming ban.

Roland Cloutier, global chief security officer for TikTok, says in a new court filing, in advance of an upcoming hearing in the US District Court for the District of Columbia, that the Commerce Department made several incorrect assertions about the company’s data security policies and practices.

A judge granted a preliminary injunction to video-sharing app TikTok on Sunday, blocking a ban on new downloads in the US that would have gone into effect at midnight. US District Judge Carl Nichols issued his decision to grant a preliminary injunction just after 8PM ET, but his opinion has been sealed, pending review by the two sides’ attorneys. Nichols did not block “at this time” restrictions by the Commerce Department set to go into effect on November 12th, however.

Attorneys for TikTok argued Sunday morning during a dial-in hearing that a ban by the Trump administration would be “devastating,” and urged a judge to block it until the entire case can be decided. TikTok’s attorney said the ban that would prevent new downloads of TikTok from Apple and Google’s app stores at 11:59PM ET today was essentially “shutting down speech.” But the government’s lawyers argued that First Amendment claims by TikTok don’t apply, because the Trump administration considers the app a national security risk.

A judge in Pennsylvania has rejected a request from three TikTok content creators to temporarily block a ban on the app set to go into effect Sunday night, which would bar new downloads from Google and Apple’s app stores in the US.

Douglas Marland, Cosette Rinab, and Alec Chambers said they “earn a livelihood from the content they post on TikTok,” saying the platform’s “For You” page is unique among social media platforms, because its algorithm allows “little-known creators to show their content to a large audience,” according to the court filing.

In a statement to reporters on Monday, Oracle announced that its new TikTok venture will be entirely divested from ByteDance, a significant break from previous reports of the agreed deal between the two companies.

“Upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global,” the company said in a statement to reporters.

President Trump says he has approved “in concept” Oracle’s bid for TikTok, less than a day before a de facto ban he threatened in August was set to go into effect.

“I have given the deal my blessing,” Trump said to reporters outside the White House Saturday as he departed for a rally in North Carolina. “I approved the deal in concept.”

Update: This piece was originally published on August 11th and has been updated to reflect the official commerce order banning transactions with ByteDance.

On September 18th, the Department of Commerce issued its first implementation of President Trump’s TikTok ban, set to take effect on September 20th. The order calls for a complete halt of all US transactions with TikTok’s parent company, ByteDance, blocking new downloads but leaving existing versions of the app in place. It’s a severe response to national security concerns that are still abstract, and a more involved ban is still scheduled for November. Many observers have sidestepped the alarming implications of the order, treating it as a tactical threat to speed along ongoing negotiations with Oracle. But if the TikTok ban is a bargaining tactic, it’s an incredibly dangerous one.

Oracle plans take an ownership stake in a newly formed TikTok corporation as part of the recently announced deal, the Financial Times reports. The new arrangement will not cleave off TikTok regionally, but it will create a separate corporate entity for the app, in which Oracle will take a minority stake. Oracle will also ensure that data from American users is stored and processed in the United States, per the recommendations of the Committee on Foreign Investment in the United States (CFIUS).

TikTok was already headquartered in California, with nominal independence from ByteDance’s China operation. The main change made by the deal is Oracle’s minority stake in the company, the size of which is still unclear. But while Oracle’s stake makes TikTok a more legally distinct corporation, it’s still likely that the resulting company will rely on algorithms and applications developed and deployed from China.

Sen. Josh Hawley (R-MO) is publicly calling on the Treasury Department to reject Oracle’s proposed partnership with TikTok, saying the arrangement is unacceptable on national security grounds.

The deal is currently awaiting a recommendation from the Committee on Foreign Investment in the United States (CFIUS), but it has received praise from Treasury Secretary Steve Mnuchin, who chairs the committee. In an open letter to Mnuchin, Hawley calls on the secretary to take a more skeptical look at the proposal.

On Sunday night — just two days before the deadline set by Microsoft — the TikTok deal finally came through. Oracle will be taking over stewardship of TikTok’s US operations, after Chinese parent company ByteDance turned down a more ambitious bid from Microsoft. This morning, Treasury Secretary Steven Mnuchin confirmed the deal and said it would be presented to President Trump with a recommendation later this week. But barring a complete catastrophe, TikTok will keep operating in the US. However weird the details are, TikTok’s 1,400 US employees and tens of millions of US users are breathing a sigh of relief this morning.

But the last-minute sale is strange in a number of ways — for a start, it’s not a sale at all. After months of insistence that TikTok sever its US operations from Chinese ownership, we’re now settling for a vague partnership between Oracle and the US TikTok operation. It’s still unclear exactly what Oracle’s “trusted tech partner” status entails, but it’s definitively not a sale, and it’s unlikely Oracle is taking over any significant operations from the US TikTok offices. Microsoft’s version of the deal would have severed American TikTok from Europe and Asia entirely, but Oracle’s version of the deal leaves it mostly intact. US TikTok will stay the same as Korean TikTok and Nigerian TikTok; it’s just getting an extra babysitter. That makes it less of a sale and more of a glorified hosting deal. It lets Trump say he’s solved the problem but doesn’t do much else.

Oracle has reportedly won a deal to manage TikTok’s US cloud operations. Oracle had been rumored to be part of the bidding process to acquire TikTok, but The Wall Street Journal reports that the company has been selected as a “trusted tech partner” instead. This is different from an outright sale, and appears to suggest Oracle will be helping run TikTok’s US operations with its own cloud technologies.

News of an Oracle deal comes just an hour after Microsoft revealed it was no longer acquiring TikTok after its bid was rejected by TikTok owner ByteDance. Microsoft had been pursuing a deal to buy TikTok’s operations in the US, Australia, Canada, and New Zealand. It’s clear talks have swayed away from a full acquisition, with Oracle reportedly winning the bid to be a technology partner instead.

Microsoft says it’s not acquiring parts of TikTok’s operations, after its bid was rejected by TikTok owner ByteDance. After weeks of talks and very public back and forths involving the Trump administration, Microsoft ultimately failed in its attempts to acquire TikTok.

“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft,” says Microsoft in a statement. “We are confident our proposal would have been good for TikTok’s users, while protecting national security interests. To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”

TikTok’s high-profile search for a US buyer is hitting a roadblock after weeks of public negotiations and months of national security debates. A string of reports from Reuters, Bloomberg, and The Wall Street Journal describes a growing stalemate over the algorithm behind TikTok’s For You page, arguably the most important piece of software the company has. That algorithm has become a sticking point between the US and China, and what happens to that algorithm now seems like the central issue for any possible deal.

First publicly confirmed on August 2nd, the proposed TikTok acquisition comes in response to months of escalating concerns about Chinese ownership of an app used by millions of Americans. Microsoft, Oracle, and Triller have all put in bids to purchase TikTok’s operations in the US, Canada, Australia, and New Zealand (roughly 30 percent of worldwide users) to allay the concerns. The details of the acquisition are still in flux, but it is estimated to be worth around $30 billion, and Microsoft has committed to either finalizing or dropping the deal by September 15th.

Plans for a TikTok sale may have a new obstacle, with China implementing new rules on AI technology exports, The New York Times reported. The new export control rules, which focus on technology the Chinese government considers sensitive, could mean that TikTok’s parent company, Beijing-based ByteDance, might need a license before it can sell TikTok to an American company.

The updated regulations prohibit exporting technology including text analysis, voice recognition, and content suggestions without a license from the Chinese government. According to The Wall Street Journal, a Chinese government official told state-run Xinhua News Agency that ByteDance should “seriously and cautiously” consider halting talks for a sale of TikTok.

A group of WeChat users is suing the Trump administration over the president’s executive order banning transactions with the app, The Wall Street Journal reported. The group isn’t affiliated with WeChat or its owner Tencent, but seeks to block the president’s August 6th order which the group says is unconstitutional because it violates users’ due process and free speech rights, according to the Journal.

The lawsuit also argues that the ban targets Chinese-Americans. “It is the primary app Chinese-speakers in the U.S. use to participate in social life by connecting with loved ones, sharing special moments, arguing ideas, receiving up-to-the minute news, and participating in political discussions and advocacy,” the lawsuit states, and has “become essential to the conduct of daily life for its users, many of whom regularly spend hours each day on the app.” 

TikTok confirmed Saturday that it will file a lawsuit against the Trump administration over an executive order demanding parent company ByteDance divest its TikTok operations in the US. It’s the first time the company has confirmed it will pursue legal action, a move that has been rumored for several weeks. Reports began surfacing Friday that a lawsuit was likely imminent.

“Even though we strongly disagree with the administration’s concerns, for nearly a year we have sought to engage in good faith to provide a constructive solution,” TikTok spokesman Josh Gartner said in a statement to The Verge. “What we encountered instead was a lack of due process as the administration paid no attention to facts and tried to insert itself into negotiations between private businesses.”

Oracle has expressed an interest in acquiring TikTok, according to the Financial Times, giving Microsoft a potential competitor in its bid to control the Chinese social video app in the US. Larry Ellison’s enterprise software giant has reportedly held preliminary talks with TikTok’s parent company ByteDance already, working with venture capital firms including General Atlantic and Sequoia Capital, and is “seriously considering” acquiring its business in the US, Canada, Australia, and New Zealand.

President Trump issued an executive order on Friday ordering ByteDance to sell its US business within 90 days. The FT notes that Oracle’s billionaire co-founder Ellison is one of the few US tech executives who has been openly supportive of Trump, though it’s not clear whether Oracle would be the White House’s preferred suitor for TikTok.

TikTok’s Android app collected users’ MAC addresses for 18 months in violation of the platform rules, as discovered by a Wall Street Journal investigation on Tuesday. The addresses would have served as a unique identifier for each user’s device, making them valuable for both advertising and potentially more invasive forms of tracking.

By 2015, both iOS’s App Store and the Google Play Store had banned the collection of MAC addresses as a matter of policy, but TikTok was still able to obtain the identifier through a loophole. A study cited by the Journal found that nearly 350 apps on the Google Play Store had taken advantage of a similar loophole, generally for ad-targeting purposes.

The Trump administration has escalated its threats to ban Chinese social media apps TikTok and WeChat within the US, issuing executive orders last week sanctioning them. The orders will ban “transactions” between US entities and the parent companies of TikTok and WeChat (respectively ByteDance and Tencent). They leave a lot of unanswered questions, but they’re a threatening development for the companies, thanks to presidents’ broad sanctions powers.

On August 6th, Trump declared TikTok and WeChat a “national emergency” because of real — but also politically convenient — privacy and security concerns. He invoked the International Emergency Economic Powers Act (IEEPA), which lets him ban transactions between US and foreign entities. This requires less evidence of wrongdoing than putting ByteDance on the Department of Commerce’s banned “entity list,” something the Trump administration did with Chinese telecom Huawei. And the likely outcome is similar. Apple and Google could have to stop offering TikTok and WeChat on their app stores, and other parts of Tencent’s massive tech and media empire could suffer too. Existing app users wouldn’t necessarily be forced off the network, however, the way they’d be with China’s site-blocking Great Firewall.

Twitter has had preliminary discussions about a “combination” with TikTok, the Wall Street Journal reported, making the social media platform the latest possible suitor for the popular video-sharing app. As the WSJ notes, it’s not clear whether Twitter would pursue a possible acquisition of TikTok, and any such deal would have big obstacles.

The biggest challenge to any deal is the Trump administration’s executive order from August 6th, which bars TikTok parent company ByteDance from handling transactions in the US. The order takes effect within 45 days. The administration considers the Chinese-owned app a potential security threat, despite no evidence indicating ByteDance or TikTok has ever shared Americans’ data with the Chinese government. TikTok has said it plans to challenge the Trump administration’s order.

TikTok plans to sue the Trump administration over the president’s executive order banning the app in the US, and the company may file the lawsuit as early as Tuesday, NPR reported.

According to NPR, the lawsuit will argue the president’s action is unconstitutional because TikTok did not have time to respond. The lawsuit also will allege that the president’s justification for the ban— that the company is a threat to US national security— is baseless, NPR reported.