US-run TikTok to license algorithm, White House says

The software giant Oracle will oversee the security of Americans’ data and monitor changes and updates to its powerful recommendation technology under a new deal to avert a TikTok ban, according to a senior White House official.

A copy of the algorithm, the recommendation engine that powers the app’s addictive feed of short videos, will be licensed from China to an American investor group that will oversee the app in the United States, the official said.

Oracle will also invest in the new American TikTok, as will private equity firm Silver Lake, another senior official said.

It will be “secured” in the United States outside the control of TikTok’s Chinese owner, ByteDance, one of the officials said. The US-run TikTok will work to retrain the copy on users’ data in the United States, and China will not have access to the data, the officials added.

The deal is an effort to meet the requirements of a law that would have banned TikTok in the United States unless ByteDance relinquished control of the app. It was intended to address national security concerns that the app’s ownership could give Beijing a channel to spread propaganda or to collect sensitive data about Americans. Last week, President Donald Trump extended the deadline for its enforcement for a fourth time.

Who controls the algorithm has been a central issue in the debate over TikTok’s ties to China. Chinese law says that algorithm must remain under Beijing’s control. But US law requires TikTok to be cut off from any “operational relationship” with ByteDance, “including any cooperation with respect to the operation of a content recommendation algorithm.”

Trump and administration officials have been discussing a deal to give Western investors a controlling stake in the app’s U.S. operations.

Under the terms of the deal, American companies will own around 80% of the US version of the app. ByteDance and other Chinese investors will own less than 20 per cent.

In the United States, TikTok will be operated by a board of directors with national security and cybersecurity credentials, one of the senior officials said. ByteDance will choose one director on the seven-member board, and that person will be excluded from TikTok’s security committee.

The exact mix of investors has been in flux. Trump hinted this weekend that media mogul Rupert Murdoch and his son Lachlan were considering an investment, which could come through the media giant Fox Corp., a person familiar with the talks said.

The agreement also provides some assurances for how Americans’ sensitive data will be secured. The information will be stored in a “purpose-built cloud environment” in the United States and run by Oracle, one of the officials said.

It may be some time before there is ink on paper for a deal. The officials said Monday that the president would extend the deadline for an additional 120 days to allow time for the transaction to take place.

Also on Monday, Oracle promoted two executives, Clay Magouyrk and Mike Sicilia, to be the company’s co-CEOs. Its current chief, Safra Catz, was named executive vice chair of Oracle’s board.