TikTok’s US partnership with Oracle comes days before the Trump administration is expected to ban the popular short-form video app from the United States. But despite the two companies reaching a deal before Trump’s Sept. 20 deadline, it’s far from clear whether the agreement can successfully stave off the ban. Here’s why.
Trump’s executive order on Aug. 6 seeks to ban business dealings with TikTok by any US citizen or organization after Sept. 20. But just because TikTok may have reached an agreement with Oracle this week doesn’t guarantee that TikTok will be spared, according to national security experts.
With the deadline less than a week away, Oracle and ByteDance, TikTok’s Chinese parent company, have little time to wrap everything up.
“It is not clear whether the government will delay implementation of the ban on transactions with TikTok,” said Aimen Mir, a partner at the law firm Freshfields Bruckhaus Deringer and a former member of the Committee on Foreign Investment in the United States (CFIUS).
Under a second executive order that Trump signed on Aug. 14, any sale or transfer of TikTok must be approved by CFIUS, the US government agency charged with reviewing the national security implications of foreign investment deals.
That order also requires TikTok to wait 10 days before closing a deal, starting from when it tells CFIUS of the business agreement. Even if TikTok submitted its notification on Sunday, that is still fewer than 10 days before Trump’s Sept. 20 deadline.
In an interview with CNBC Monday morning, Treasury Secretary Steven Mnuchin said that a proposal for the TikTok partnership with Oracle had been received over the weekend and that CFIUS would review it this week.
“I will confirm we did get a proposal over the weekend that includes Oracle as the trusted technology, partner with Oracle making many representations for national security issues,” Mnuchin said on CNBC. “We’ll be reviewing that at the CFIUS Committee this week and then we’ll be making a recommendation to the President and reviewing it with him.”
Mnuchin added that the Oracle proposal includes a commitment to make TikTok “a US-headquartered company with 20,000 new jobs.”
In a statement, Oracle confirmed that it had reached a deal to be TikTok’s “trusted technology provider.” TikTok declined to comment Sunday night.
Does the deal satisfy Trump’s orders?
Sources have described the Oracle deal to CNN as not being an outright sale. But Trump’s second executive order specifically calls for TikTok to be completely spun off from ByteDance, said Harry Broadman, partner at Berkeley Research Group and another former CFIUS official.
“Divestiture usually means a change in ownership, so I think there’s a question about whether or not this [deal] would comport with the requirement that this be a divestiture,” Broadman said.
Trump has issued off-the-cuff remarks implying that TikTok will be banned this month unless it finds a buyer. But neither of his executive orders promises to waive or suspend the ban in the event of an announced deal. The White House declined to comment in response to CNN’s questions seeking clarification.
Last week, Trump told reporters that “we’ll either close up TikTok in this country for security reasons, or it’ll be sold. I’m not extending deadlines, no. September 15. There’ll be no extension of the TikTok deadline.”
Trump’s stated deadline of Sept. 15 diverges from the Sept. 20 deadline for the ban laid out in his Aug. 6 executive order. It was not clear why Trump cited a different date when speaking to reporters, but Mnuchin on Monday confirmed that the deadline is Sept. 20, not Sept. 15.
Microsoft, which had been competing with Oracle for TikTok, had established Sept. 15 as its own target for finishing deal negotiations. It is possible Trump simply conflated the two dates.
Confusing things further, Trump’s Aug. 14 executive order gives TikTok much longer, until mid-November, to find a buyer and clear it with CFIUS.
That raises the possibility that even if TikTok cannot complete its deal with Oracle in time to meet the Sept. 20 deadline for a US ban, US authorities could implement the ban in ways that would permit TikTok to continue running in some limited fashion until the agreement is finalized.
What’s in a ban?
How the Trump administration plans to roll out the ban is also ambiguous and confusing, experts say. The Aug. 6 order bars all “transactions” with TikTok, which could be interpreted to mean anything from downloading the app to hosting it on official app stores to handling TikTok’s employee payroll. But it doesn’t specify those things by name.
“The specific wording is so broad that it’s not obvious to me the actual impact on the day to day use of the app,” said Broadman.
While the order instructs the Commerce Department to identify which exact business dealings will be prohibited under the ban, the department won’t have to do so until after the ban takes effect — which critics argue will put those who interact with TikTok in legal limbo.
A US-based TikTok employee has sued the Trump administration over that issue, claiming that the vagueness of the order could threaten his ability to be paid. The employee has asked for a judicial decision to suspend the executive order; that decision could arrive as soon as Tuesday.