Yahoo Finance Who is lining up against the TikTok deal in Washington – and why
President Trump is expected to rule on the proposal for Oracle (ORCL) to team up with the Chinese company ByteDance by Friday.
According to reports, the emerging deal would have Oracle take ownership of roughly 20% of the company. Walmart (WMT) is also expected to be part of the deal in some form.
A Walmart spokesperson declined to comment to Yahoo Finance on any deal with Oracle and TikTok.
The key question – which could determine the level of opposition in the weeks ahead in DC if the Trump administration wants to move forward – is how the data generated by U.S. TikTok users would be handled and whether ByteDance would retain control over the information.
If the president decides to allow the deal – far from a sure thing – he could face a chorus of opposition from across Washington, including some of his closest political allies on other issues.
“I think [Oracle is] going to pull it off,” said Pat Walravens of JMP Securities on Yahoo Finance’s “On the Move,” noting that the federal government is currently Oracle’s largest customer with all four branches of the military using Oracle products.
Trump also has close ties with Oracle CEO Larry Ellison – who is one of the president’s richest and most prominent backers. The Treasury Department-led Committee on Foreign Investment in the United States is currently investigating the deal and a decision from the Trump administration could come anytime.
‘Significant concerns’ from Republican senators
Sen. Marco Rubio (R-FL) is leading a range of Republican senators, including Senators Thom Tillis of North Carolina, Roger Wicker of Mississippi, Rick Scott of Florida, Dan Sullivan of Alaska, and John Cornyn of Texas – to raise “significant concerns” about any deal.
Rubio wrote in a letter that any deal “must ensure that TikTok’s U.S. operations, data, and algorithms are entirely outside the control of ByteDance or any Chinese-state directed actors.” What’s unclear is if the reported parameters of the deal – Oracle owning roughly 20% of the company – would be enough to satisfy their objections.
Early Thursday, Rubio tweeted that he had “informative” discussions with the Treasury Department and Oracle.
I have had informative talks twith @USTreasury & @Oracle about the proposed deal with @tiktok_us
The only thing that matters is whether we are protecting the personal & consumer data of Americans from being collected by &/or diverted to #China.— Marco Rubio (@marcorubio) September 17, 2020
Other Republican senators have expressed even more rigid opposition.
Sen. Ted Cruz (R-TX), in a separate letter, said he wanted to remove the Chinese Communist Party “root and branch,” adding that the idea of any sort of partnership between Oracle and ByteDance “raises serious national security concerns.” Sen. Josh Hawley (R-MO) has also sent a letter saying the deal should be rejected.
Sen. Marsha Blackburn (R-TN) is yet another voice against. During a recent Fox interview, she expressed concern that ByteDance would still have “visibility” into U.S. data and said she was opposed to the Chinese company having “any type of presence” in the U.S. going forward.
Now it’s unclear what this coalition of Republicans could do if Trump and Treasury Secretary Steven Mnuchin decide to go forward with the deal and this Senate opposition holds. Congress has no formal role in the CFIUS process but vocal opposition from his own party and even Senate hearings could be a major impediment to the deal being finalized in the run-up to November’s election.
Democratic opposition as well
Prominent Democratic senators have also raised questions about a deal. Sen. Ron Wyden (D-OR) recently said in a statement that “it’s hard to imagine this is anything but a payoff from China to one of Donald Trump’s major campaign fundraisers,” adding:"[m]aking Oracle a middleman won’t protect Americans against Chinese government influence.”
Sen. Mark Warner (D-VA) said in a speech Wednesday that the Trump administration’s actions on TikTok have been “haphazard” and the way it has been conducted “will only invite retaliation against American companies.”
The signs are also that a potential Joe Biden administration would also approach TikTok negotiations with a preference towards forcing the company fully into American hands.
Growing skepticism from Trump’s aides and the president himself
On Thursday, White House Chief of Staff Mark Meadows expressed the most skepticism from the White House so far about any deal. He said if TikTok remains predominantly Chinese-run, it would not meet Trump’s objectives.
During his press conference Wednesday night, Trump said a decision hasn’t been made. “It has to be 100% as far as national security is concerned,” he said. “I have to see the deal” before signing off on anything.
The president also appeared to back away from his previous demand that the government receive a cut of any deal. “Amazingly, I find that you’re not allowed to do that,” Trump said.
Ben Werschkul is a producer for Yahoo Finance in Washington, DC.
Read more:
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