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Here’s one more chore that Joe Biden should add to his Day One presidential to-do list: launch an investigation into whether the Trump administration improperly steered the U.S. operations of the world’s hottest new social media platform, TikTok, into the hands of one of his most important supporters, Oracle co-founder Larry Ellison. The deal, framed by Secretary of the Treasury Steve Mnuchin and Commerce Secretary Wilbur Ross as an alternative to “killing” TikTok outright, would move its headquarters to the United States and take a deal with Microsoft off the table. It now awaits Trump’s approval.
The TikTok controversy emerged in August after K-pop fans organized on the platform to undermine a Trump rally by reserving tickets for a June 21 Trump rally in Tulsa, OK that they never planned to use. On August 6, the administration issued a highly unusual executive order that labeled TikTok a national security threat, banning the app in the United States unless the Beijing-based ByteDance reached an agreement by September 20 to sell the operation to a domestic entity.
The president has a track record of using the government to promote deals he likes and interfere with ones he doesn’t. And he sure likes the owner of Oracle. The fifth richest person in the world, according to Forbes, Ellison hosted a fundraiser for Trump’s re-election campaign on February 19, prompting about 300 Oracle employees to leave work in protest the next day.
But the proposed deal—which includes a proposed 20,000 jobs at the new TikTok global headquarters–also juiced the stock market, the only evidence Trump has that his administration is good for the economy. On Monday, Mnuchin and Oracle confirmed weekend news reports that Ellison’s company agreed to become TikTok’s “trusted technology provider.” Oracle investors believe it will boost the company’s cloud computing business. In the short term, it also created smiles for investors: Oracle’s stock price jumped more than 4% after the announcement an all-time high.
But the public has not been told the necessary details about the transaction. This information would include how the entity that will control the TikTok operations will be structured and how much Oracle has agreed to pay. CNBC said that the price might be somewhere between $20 billion and $30 billion.
The United States, and, more importantly, perhaps, Chinese officials, still must approve the deal. Beijing appeared wary last month when it updated its laws affecting what technologies are subject to export restrictions — the first revision since 2008 — to include many of TikTok’s key software elements.
But if the deal closes, then its effects could be far-reaching. TikTok is the world’s fastest-growing social media app for pre-teens. Users can easily create short news and entertainment videos and, like other social media apps, watch videos picked for them by an algorithm that harnesses user data to determine preferences.
That’s changing the way young people discover music and allowing teens around the world who are too young to vote to engage in politics—embarrassing the Trump campaign when turnout at an already controversial rally was far smaller than forecast brought the app to national attention.
And TikTok, like YouTube before it, also threatens to upend the media business: it helped to make Lil Nas X’s song “Old Town Road,” a country-western and rap mashup, a hit last year.
But that’s just the beginning. ByteDance, an artificial intelligence company, has said it expects to build several platforms based on technology pioneered on TikTok, and the U.S. domestic market is key to those ambitions. About 100 million people here use TikTok at least once a month, and 50 million use it every day. TikTok expects to sell about $500 million worth of ads this year just in the U.S. — up from around $200 million to $300 million it sold last year worldwide.
No wonder ByteDance announced in May that it had hired an American, Kevin Mayer, away from Disney to serve as CEO of TikTok. Mayer gave up a lot for the job: he ran Disney’s streaming services, including Disney+, making him a potential candidate to run the company eventually.
Yet ByteDance’s potential investment in the United States economy failed to woo Donald Trump. In his executive order, Trump warned, without evidence, that TikTok’s data collection techniques were far more potent than the thousands of apps that populate our devices. TikTok, he claimed, could enable China to “track the locations of Federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage.”
Trump’s executive order, although unusual, didn’t come entirely out of the blue. Democrats, including Senate Minority Leader Chuck Schumer, wanted to investigate the Chinese company as a possible security threat. In July, at the direction of general counsel Dana Remus, Joe Biden’s campaign told campaign workers to remove the app from their work and personal devices.
How has Oracle gained Trump’s seal of approval so quickly, when Microsoft—which had been negotiating for weeks—got the cold shoulder?
The logic behind this shift is as yet anecdotal. “Oracle is a great company, and I think its owner is a tremendous guy, a tremendous person,” Trump told reporters on August 19. “I think that Oracle would certainly be somebody that could handle it.” A little more than a week later, Mayer resigned from ByteDance without saying more than that “the political environment has sharply changed” and would prevent him from assuming “the global role I signed up for.”
We can’t say for sure that Trump delivered TikTok to Ellison to repay him for his support. It’s easy to see why Oracle, which vigorously competes with Amazon, Google, Microsoft, and IBM, would bid aggressively to land a business that could enhance its cloud computing business and entice new investors.
But you don’t have to be a conspiracy theorist to wonder whether there’s a backstory here. The president has a long history of involving his administration in business deals in ways that seem to help his interests and hurt his adversaries. And tech deals, which do not require Congressional approval, have focused on many of his interventions.
Last October, he appeared to have scuttled Amazon’s bid for a $10 billion Joint Enterprise Defense Infrastructure cloud computing contract. Amazon chief Jeff Bezos also owns The Washington Post, making him a Trump target. This time, Microsoft prevailed after Trump told reporters that he’d ask the Pentagon to “look at [Amazon] very closely” because “great companies” — including Microsoft, Oracle, and IBM — “are complaining about it.” In 2018 the Justice Department sued to reverse AT&T’s $85 billion acquisition of Time Warner, which owned CNN — a frequent Trump target. A U.S. Appeals Court rejected the Justice Department’s antitrust argument.
Other deals seem fishy too. In 2017 the General Services Administration canceled a multi-year effort to relocate the FBI from its current location near the Trump International Hotel to a new campus in a Washington, DC suburb. GSA’s Inspector General later said that emails referred to “what POTUS directed everyone to do” and “POTUS’s orders.”
The administration, of course, denies these allegations. So what to do? Ronald Reagan liked to cite a Russian proverb: “trust, but verify.” Given Trump’s suspicious track record, that seems to be good advice for a potential Biden Justice Department: investigate the circumstances that led to the TikTok deal with one of Donald Trump’s key campaign donors.
But maybe — considering that Trump has made more than 20,000 false or misleading statements while in office—they should scrap the part about “trust.”
David Lieberman is Associate Professor of Professional Practice in Media Management