International Policy Digest

Tech /21 Oct 2020
10.21.20

For Trump, TikTok Was Always Political

Now that President Donald Trump has given his approval to the deal between ByteDance, Oracle, and Walmart for control of TikTok, we could finally have confirmation of what many of us suspected all along: that Trump was only against TikTok in order to appear tough on China.

Although the Trump administration is selling the deal as a triumph of international diplomacy, and of Trump’s own skills as a negotiator, a cursory glance through the details of the agreement makes it clear that it does not accomplish everything that it set out to do.

Instead, it could be a fairly transparent attempt to reward the president’s campaign donors and give him political capital, while leaving the security concerns raised by the issue itself unresolved.

The problem with China

The issues with Chinese-owned smartphone apps are well known. Many analysts who have looked at the U.S.-China tech race, including concerns surrounding Huawei, have pointed out that there is little to no division between private enterprise and the Chinese government.

As a result, it is difficult to believe that any Chinese-majority-owned tech company can refuse to spy on users if requested by Beijing. Furthermore, TikTok relies on continuous integration, which means that code is frequently injected into the shared repository of a project in order to make small but frequent modifications as feasible as possible.

This also means that continuous integration software relies on numerous configurations and dependencies, and therefore has numerous attack points in order to exploit. In other words, it should theoretically be relatively easy for hackers working for the Chinese Communist Party (CCP) to hack into TikTok even if they were to claim that they do no such thing.

What to do about that is, however, an extremely thorny issue. Trump’s initial demand was that TikTok be banned outright. Whether that was ever possible is highly doubtful: another planned ban on a Chinese app, WeChat, was struck down by a District Court judge on the grounds that it violated users’ right to free speech.

The solution that the administration had come to, however, bears no similarity to this approach. In fact, it achieves precisely the opposite: securing Chinese ownership of the app with little U.S. oversight.

The art of the deal?

As a result of the sale, Walmart and Oracle will own 20% of TikTok. The remaining 80% will be owned by ByteDance. Since U.S.-based investors like Sequoia Capital already own 40% of ByteDance, this means that total ownership of the new company now stands at 53%.

However, it’s worth noting that this ownership is also more theoretical than actual. ByteDance remains a company wholly operated from within China and has not indicated it will give any form of control to American investors.

This matters for two reasons. One is that the company’s relationship to the CCP will remain as opaque – or as transparent, depending on your perspective – as it is today, and neither the U.S. government nor U.S. investors will have any way of tracking whether ByteDance is sharing information with Beijing.

This would not be so much of a problem, however, if another of the key claims of the deal had been realized. When the Oracle deal was first floated, it was claimed that it would give the tech company a look “under the hood” of TikTok in order to see what information it could collect if ByteDance wanted to.

This has not happened. China has not yet said whether they would allow Oracle into TikTok’s software. Furthermore, the CCP has also indicated that it plans to reuse an ‘unreliable entities’ list that it created during the U.S.-China trade wars that would allow it to prohibit U.S. entities from trading goods into or out of the country.

Jobs for the boys

In fairness, there’s no doubt that there was solid ground for concern in President Trump’s claim that TikTok posed a major security threat. Earlier this year, it became well established that the CCP was using TikTok to spy on Australians, and there was also a good reason to believe that TikTok was capable of funneling the personal data of American users to the CCP as well.

But things get even worse when you look at the connections between Oracle – by far the biggest beneficiary of this deal – and President Trump himself. As has been well established, Oracle founder Larry Ellison is a major backer of Trump, and now appears to have been rewarded.

Given the president’s prior actions, it should also come as no surprise that he wasn’t as excited about a deal when for a time it appeared that Microsoft was the U.S.-based corporation most likely to acquire TikTok.

This raises deeply troubling questions about the state of our Union, of course, but also concerns that even the United States – supposedly the most powerful nation on earth – is unwilling or incapable of containing the very real threat of China.

The good news is that it is unlikely China would act further unless provoked to do so. After all, China has a significant number of workers and a large amount of money invested in U.S. companies that have operations in the country as well. However, during the tariff war, China has also shown that it is prepared to retaliate to U.S. actions, so it remains to be seen as to how they will react.

It’s unknown what the reaction in Beijing has been to the recent deal, but it’s not hard to guess that it was jubilant. It appears to suggest that when it comes to this president at least, looking tough on China is far more important than a separation of commerce and politics.