The Adventures of Princess TikTok in Mar-a-Lago land 

Jerry Bowles Profile picture for user jbowles August 25, 2020
The TikTok saga resembles a Medieval soap opera more with every twist and turn. The big question is why Microsoft or Oracle want to buy a potential regulatory nightmare. 

tis tok logo
(Tik Tok)

Once upon a time, a popular foreign-born princess named TikTok was given 90 days to find and marry a native groom or be banished from the kingdom of Mar-a-Lago Land by an unpredictable king.  Although he couldn't prove it, the king claimed the princess was spying for her native kingdom-Wuhan Land--and was a security risk to the kingdom.

Maybe not coincidentally, the king was also angry at his home kingdom over stalled trade negotiations and was anxious to blame Wuhan Land for a deadly plague that is sweeping the kingdom.   

Alas, a big problem for the princess was that all of the obvious handsome young suitors already had so many wives that people were starting to grumble that they were monopolizing the wives market. To the rescue on a white horse rode the wealthy but elderly Prince of Redmond, who shared little or no apparent interests with the potential princess bride but seemed eager to start dating.  The courtship began but, suddenly, a new wealthy elderly gentleman--the Oracle of Oracle, a man with closer ties to the king, appeared on the horizon. 

Should the princess accept the first elderly gentleman's proposal or should she go out with elderly gentleman number 2?  Are there other secret suitors on the horizon? Does the king actually have the power to force a shotgun marriage of private companies?  These are questions still to be answered.  

The story so far

On August 6, President Trump issued an executive order that would effectively ban the short video platform TikTok-owned by the Chinese internet giant ByteDance and much loved by 14-year-olds around the world--from operating in the United States in 45 days (later raised to 90) unless it could find an American company to buy it. 

The President, whose trade talks with China are at a low point, accused TikTok of "providing a channel for the Chinese Communist Party to obtain Americans' proprietary information, keep tabs on Chinese citizens abroad and carry out disinformation campaigns to benefit China's interest" which threatened "the national security, foreign policy and economy of the United States." For good measure, he included another Chinese-owned app called WeChat.

While no evidence has yet been produced to show that TikTok directly coordinates with the Chinese government, Ron Hayman, COO and Chief Cloud Officer at Avant Communications, a platform for IT decision-making and a premier distributor for next generation technology, told me that it is a legitimate concern:

Private Chinese companies owe their ultimate allegiance to the government and that can be a huge security risk.  TikTok is not as much of a national security risk as Huawai but the app has access to your camera, your microphone, your contacts, your social media so I think the scope of its capabilities and its ties to the Chinese government causes some real concerns for both businesses and governments.

The Trump has been playing increasingly hard ball with China for a few months now. A few days before the TikTok executive order, the U.S. State Department announced a "Clean Network" initiative, threatening to ban not only apps, but Chinese undersea cables, telecommunications firms that have operated in the U.S. for years and businesses that store information in the cloud.

After Trump's ultimatum, Microsoft, which had already announced that it was negotiating with ByteDance to buy TikTok, but only in the United States, Canada, Australia and New Zealand, quickly excused itself from negotiations. A few days later Satya Nadella, Microsoft's chief executive talked to the President by phone and the TikTok talks were back on the front burner.

A week or so later, Oracle surprised everybody by announcing that it had met with ByteDance and was working with some of the app's investors--including venture capital firms General Atlantic and Sequoia Capital-to put together a rival deal for TikTok's operations in the US, Canada, New Zealand and Australia. That raised eyebrows because Oracle is one of the few tech companies known to have friendly relationships with the administration. 

The big question about the whole story is why big tech's old guys are so eager align themselves with a princess whose beauty is equaled only by the avalanche of scrutiny and number of potential PR disasters she invites?   

Neither Microsoft nor Oracle are in the social media business and neither does the kind of aggressive data collection that is now being heavily scrutinized by regulators around the world. But - both companies have heavy investments in cloud infrastructure and yanking TikTok into those orbits would certainly add a lustrer to their enterprise credentials. 

Governments everywhere are rushing to enact systems that protect user privacy or, in too many cases, monitor the movements and activities of their own citizens. In the face of so much potential tsuris, why would either want to buy such an expensive bundle of potential trouble? Let's speculate a moment. 

For Microsoft, the most obvious answer is--because it can. Microsoft has the money to buy the platform and the technical resources needed to decouple all that data from its Chinese owner and its presumed cozy relationship with the Chinese Communist Party.  Unlike Google or Facebook who are already getting dirty looks from regulators, the sale would, presumably, face little resistance.  While Microsoft is mainly an enterprise company, it does have some experience with consumer products and would likely play the LinkedIn card as tangential evidence of the fact. 

Oracle's motives are somewhat less clear.  The company is best known as the maker of database software and business applications.  Among the theories being bandied around is that Orrcle would use its position with digital advertising firms who use their databases; that TikTok would make a great showcase customer for its cloud business, and, of course, the possibility that its legendary CEO Larry Ellison is just trying to annoy Microsoft.  Ron Heyman told me:

The only reason I see for Oracle to purchase TikTok is because it is a distressed asset that they could spin off in the future. Microsoft has been more enterprise-focused but they do have a consumer brand around search, hardware, and ad sales. They could monetize TikTok without any concern of the purchase being blocked by the Federal Trade Commission. Eventually this company gets sold or goes public and the company selling it keeps a minority share. 

Neil Sweeney, CEO and founder of Killi, data management platform that has helped, they say, over 1 million people protect and profit from their data, believes that the whole thing is just the latest in an ongoing trend of tech companies that have been misusing Americans' data and that some of the biggest culprits are in our very own backyard.  

The true motive behind the deal, he said, all boils down to gaining valuable data that will provide insight into consumer behavior--without having to get consumer buy-in:

It's shocking that people are being so adamant about TikTok's data collection practices, while the Big Four have been getting off scot-free for doing the exact same thing for years. The reality is that Google, Apple, Amazon and Facebook have collected way more data from American consumers than TikTok has--and it's a lot more personal. Why isn't Google's class action lawsuit not getting more prominence for tracking people in private mode? If we are truly putting data privacy under the microscope and giving it the attention it deserves, we must do so with the companies that are in our own backyard as well.

My take

I have no inside knowledge, of course, but it does occur to me that having 186 million daily users would be a great way to make a little pocket change and use all that content to build and train the best AI system on the planet.

Big picture-wise, this is one more nail in the coffin of that exciting concept those of us who were around in the beginning were so excited and pumped about. The World Wide Web is dead. The walled-off internet is the future.  

Disclosure - Oracle is a premier partner at the time of writing

Read more on:
A grey colored placeholder image