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How the Oracle-TikTok deal would work

An agreement between TikTok's Chinese owner ByteDance and Oracle includes a variety of concessions in an effort to make the deal palatable to the Trump administration and security hawks in Congress, according to a source close to the companies.

The big picture: The deal, in the form of a 20-page term sheet agreed to in principle by the companies, would give Oracle unprecedented access and control over user data as well as other measures designed to ensure that Americans' data is protected, according to the source.


Why it matters: The President and U.S. leaders have been calling for a complete sale of the business. While this isn't that, it does create several layers of oversight, including a continuous third-party audit and an independent board approved by the U.S. government.

Details: Among the provisions of the term sheet, per the source:

  • Oracle will have the exclusive ability to oversee all tech operations for TikTok in the U.S.
  • Oracle will review TikTok's source code and related software to ensure there are no backdoors.
  • Oracle will also be able to review all updates to TikTok's software to ensure no adverse changes are made.

TikTok in the U.S. will have its own board, approved by the U.S. government.

  • That board will include a security director — an independent data security expert with national security credentials, so likely a former NSA or CIA official with a high-level security clearance.
  • There will also be a security subcommittee of the board composed of U.S. citizens with the final say on matters related to security and data privacy. It will have veto power over board decisions that go against the company's security commitments.
  • That subcommittee will also be responsible for ensuring compliance with CFIUS and other U.S. agency demands.

A separate entity, TikTok Global, will have its own board and be based in U.S. It’s that entity in which Oracle, as well as Walmart, will have an ownership stake.

Between the lines: While the deal does not constitute a full sale and likely leaves a substantial chunk of the company in Chinese hands, the source notes this is way more than any other tech company is doing or being asked to do.

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