There seems to be some light at the end of the tunnel for TikTok in the U.S.
Well, kind of. The app’s parent company, ByteDance, on Sunday reached a preliminary deal with Oracle aimed at addressing the Trump administration’s TikTok privacy concerns, though it does not involve an outright sale.
Under the deal, many details of which are still ambiguous, Oracle would serve as TikTok’s “technology provider” and establish a new U.S.- based headquarters for the company. Microsoft, which had been seen as a front-runner in the TikTok bidding race, announced that its bid for the app’s U.S. operations was rejected.
The Trump administration is now reviewing the proposed TikTok-Oracle deal as the Sept. 20 TikTok sale deadline approaches.
Because of the early stage of the deal and the ever-changing stance of Trump on how to deal with the hugely popular video-sharing app, it’s still not a given TikTok will be able to avert having its U.S. reach diminished in the coming weeks.
But even if TikTok can skirt Trump’s ban threat, à la Oracle, ByteDance’s headaches are far from over.
For one, just think of TikTok’s government clashes abroad, where it’s faced a heavier hand than American social-giant rivals like Facebook in one of Silicon Valley’s most coveted battlegrounds for user growth.
TikTok is still banned in India, where it counted a cool 270 million users before being shut out in late June. And amid the current political tension between the Indian and Chinese governments, many see it as unlikely that a group of investors in India would soon aim to rescue the app there.
Second, what’s happened to TikTok in the U.S. this summer sets a precedent that, at least under the Trump administration, the company’s fortunes can be changed seemingly on a whim. Remember that Friday when Trump said he was banning TikTok, infuriating his advisers who that same day recommended they force ByteDance to sell TikTok’s U.S. operations to an American owner?
This type of instability seems like something that could make TikTok radioactive to top-tier C-suite-ers: Just look at what happened with Kevin Mayer. This type of perceived radioactivity may persist as long Trump remains in office.
And while TikTok has still held strong download growth of late, recent survey data by media company Team Whistle suggests Reels will cause some users to spend more time on Instagram, and that could chip away at TikTok’s growth trajectory.
Getting involved in the social media business is difficult, plain and simple. It wasn’t too long ago that former Disney chief Bob Iger got cold feet on purchasing Twitter due to the platform’s “nastiness.”
Assuming they don’t change course, perhaps Microsoft and other rejected or since-disinterested TikTok bidders will similarly feel better about not getting in on the TikTok action in the years to come as some of its problems continue to snowball.