Here’s an interesting wrinkle to the U.S. TikTok deal: Congress doesn’t even know if the new U.S. ownership arrangement complies with the letter of the law, and meets the requirements of the Senate-approved “Protecting Americans from Foreign Adversary Controlled Applications Act.”
That’s because the new U.S. ownership arrangement doesn’t totally separate TikTok from its Chinese ownership, with TikTok’s parent company ByteDance maintaining a stake in the business, and its algorithm being licensed to the U.S.
Which, based on the wording of the Act, could be a problem.
In the official documentation of the Protecting Americans from Foreign Adversary Controlled Applications Act, it outlines that the divested TikTok entity must:
- Ensure that the “foreign adversary-controlled application is no longer being controlled by a foreign adversary”
- Ensure that any affiliated entities controlled by a foreign adversary do not contribute to the operation of “a content recommendation algorithm.”
TikTok’s new U.S. arrangement makes clear notes about the separation of U.S. user data, with U.S. user info to be “protected by USDS Joint Venture in Oracle's secure U.S. cloud environment.”
But it’s less clear about these other elements, with TikTok’s parent company ByteDance maintaining a 19.9% stake in the new company (20% is the maximum ownership limit stipulated in the act), while TikTok’s CEO remains on the board of the new entity, and TikTok’s current head of operations Adam Presser becomes CEO of TikTok USDS.
So TikTok’s influence is still very present, and very clear, and we don’t know to what degree the algorithm can and will be changed under the new group.
TikTok noted that:
“The Joint Venture will retrain, test, and update the content recommendation algorithm on U.S. user data. The content recommendation algorithm will be secured in Oracle's U.S. cloud environment.”
But that still sounds like they’ll be using the same algorithmic code that TikTok does, and if that’s the case, does that meet the requirement in regards to how the platform operates?
Apparently, U.S. senators who now have to review the deal are unclear on this, with the details they’ve been provided proving too sparse, at this stage, to provide clarity.
Which could mean that TikTok isn’t entirely out of the woods just yet.
To be clear, I suspect that it is, and I suspect that the details will be clarified by House Oversight Committee, and that TikTok will be able to remain in operation, because you would assume that those making the deal would have been aware of the legal technicalities of such.
But there is still some chance that TikTok might have to head back to the negotiating table yet again, and the outcome could change, depending on how Chinese authorities feel about U.S. relations at that stage.
