The TikTok sale is getting weird

Late Sunday, the news dropped that ByteDance, the Cayman Islands-based but Beijing-headquartered parent company of the popular app TikTok, had picked Oracle to … do something. The initial news centered about how Oracle, a company that doesn’t really compete in the social media space or the advertising space, had beaten out companies like Microsoft – owner of LinkedIn and a fairly large advertising kingdom – to win… something.

Okay, but what is the something? Back in August, President Trump ordered ByteDance to sell its U.S. operations, initially saying it was a way to punish China for the coronavirus, somehow, before citing national security concerns, although the general belief is that it’s about punishing China as well as TikTok users, who are known for causing trouble for the president’s re-election campaign. The order to sell was quickly followed by a Chinese ban on exporting social media algorithms, which means TikTok’s most valuable product – it’s For You Page – couldn’t be part of the sale of TikTok’s U.S. operations.

The Oracle deal, then, must somehow keep the For You Page algorithm in China while keeping the service’s data in the U.S., and yet that’s – that’s already how it works. So is this really enough to keep TikTok alive?

What’s the For You Page?

The For You Page is TikTok’s big innovation. TikTok is a kind of YouTube-Twitter hybrid, showing a mix of short-form videos from users you follow and users you don’t – but might like to. At least, the app predicts that you’ll enjoy watching the videos from users you don’t follow, and once you use it a few times it gets very good at identifying the kind of person you are.

This has given rise to a concept among users that the service is divided into, for lack of a better word, sub-TikToks. Linger on a video of a frog and you might find yourself in Frog TikTok. Like a few videos where girls (often girls who like other girls, if you catch my drift) talk about plants and homesteading and you’re probably going to end up in Cottagecore TikTok. This segmentation is key to the app’s success, because it means you’re constantly fed new videos on subjects you’re interested in but in a way that feels organic.

“Trusted technology provider”

There’s nothing really vital to national security about the For You Page algorithm. Rather, blocking it from being sold is a way that Beijing can stand up to the United States – potentially ensuring other Chinese web companies aren’t forced into a sale, too.

After the country moved to protect the sacred algorithm, pundits questioned whether TikTok had any value without it. Sans algorithm, TikTok is just an app that shows you videos. There’s no shortage of apps that show you videos. Cell phones come loaded with mysterious video apps these days. What the fuck is Quibi?

There would need to be a third way, one way TikTok’s U.S. operations weren’t federated away from its Chinese parent but where its data could be housed in stateside data centers. Except this is already how TikTok operates. ByteDance’s U.S. operations are already based in the U.S., data is already housed here (with backups in Singapore). How could any company make a realistic offer of “we’ll keep doing what’s already being done” and have that offer be accepted by the U.S. Department of Commerce?

The secret is to be Oracle. While other Silicon Valley companies have been taking progressive stances (not on workers’ rights or taxation but, you know, using renewable energy in data centers and “becoming an ‘anti-racist’ company”), Oracle founder and chief technology officer Larry Ellison has been going in as much the opposite direction as he possibly can.

“I don’t think he’s the devil—I support him and want him to do well.” 

Larry Ellison, discussing Donald Trump with Forbes in April 2020

Ellison has been careful to say he hasn’t given money to Trump’s campaigns or anything – although he hosted Trump for a fundraiser at one of his California estates in February – and that he believes that Americans should support their president, something that’s no doubt easier to do when you’re a billionaire. There’s no reason to not believe, Ellison, either. He was pretty cozy with President Obama, and in general seems to kind of relish power from wherever it comes.

There’s a big bonus to the way Ellison does business. When the Trump administration reviews the pitch to move some of TikTok’s data onto Oracle’s servers – the most token of token measures, if the administration is really concerned about Chinese governmental data harvesting – it will be reviewing a pitch by a “tremendous guy,” according to the president himself. For Trump, who sees everything as a transaction, approving the TikTok-Oracle deal will be the logical trade for the fundraiser Ellison hosted.

Much ado about nothing

Fundamentally, the Oracle deal is less about protecting Americans’ data and more about making sure that a U.S. company – indeed, a U.S. company with ties to the Trump administration – gets at least some degree of control over that data and the profits that come from it.

And yet the Oracle-TikTok deal seems like it would be approved. After all, it looks like a victory for the Trump administration, with a U.S. company now controlling the user data. And it looks like a victory for Beijing, which won’t have backed down in the face of what it sees as an American attempt to control its own economy.