Not So Fast: TikTok-Oracle Deal “Falls Short Of Resolving Concerns”, CFIUS Approval Suddenly In Doubt

Not So Fast: TikTok-Oracle Deal “Falls Short Of Resolving Concerns”, CFIUS Approval Suddenly In Doubt

Tyler Durden

Wed, 09/16/2020 – 16:05

Hours after former presidential candidate Marco Rubio came out against the new TikTok-Oracle deal, which would spin off TikTok into a US-headquartered independent company majority owned by ByteDance, with Oracle holding a major stake and a contract to supervise the hosting and back-end technology while ByteDance continues to manage TikTok “at arm’s length.”

Earlier, a senior reporter from Fox Business said the deal was on track to be approved by CFIUS, the Commerce Department board that reviews deals for national-security concerns. After their initial proposal faced pushback, Oracle and ByteDance worked with the administration to devise the new deal, which was unveiled on Monday. Despite some complaints about ByteDance retaining majority control, the deal appeared set to sail through.

However, Marco Rubio came out against the deal a few hours ago. Now, Bloomberg is reporting that the deal is now facing opposition from a group of GOP senators led by Rubio , a group who have presumably been lobbying CFIUS and Trump.

Per Bloomberg, several high-ranking officials, including Secretary of State Michael Pompeo, are now concerned that after a potential transaction, TikTok’s Chinese owner, ByteDance could still access user data from its 100 million or so users in the US, its sources claimed. 

Oracle Corp.’s bid for TikTok falls short of resolving concerns of Trump administration officials that the Chinese-owned video-sharing app poses a risk to U.S. national security, according to people familiar with the matter. President Donald Trump has the authority to sign off on a deal, but continuing concerns from national security officials could sway his decision. The agreement remains on the table, with discussions continuing between administration officials and the companies, said the people, who asked not to be named because the talks are confidential. Addressing those remaining issues could pave the way for U.S. approval, the people said.

Many remain wary of the new ownership structure, which Rubio and Sen Josh Hawley have criticized for ceding too much control to ByteDance, Of course, anything less would likely be unpalatable for Beijing.

Treasury Secretary Mnuchin and AG Barr are also examining the deal. Both have some say in the final decision, since both of their departments are part of CFIUS. While Mnuchin has reportedly reviewed the deal, Barr hasn’t yet had the time. Officials first expressed their doubts to CFIUS Tuesday night, and the committee is expected to meet again on Wednesday.

We’re still waiting on the final word from CFIUS, but if the past is any guide, a rejection would no longer come as a surprise.

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Author: Tyler Durden