Unless you’ve been living under a rock, you’ve likely heard that TikTok is moving its US headquarters to New York City. This is a big move for the company, which is owned by Singapore-based ByteDance, and it’s one that could create up to 25,000 jobs in the US, according to a recent report. Despite the move, the company continues to maintain data and backups in the US and Singapore.
25,000 new jobs could be created
Earlier this year, TikTok announced plans to open a new office in Austin. The company said it would hire thousands of employees and invest in the city, with plans to create a “global brand hub.”
Now, TikTok and Oracle are partnering in a deal that may lead to 25,000 new jobs in the US. The company said it chose Oracle as its technology partner because of its “Generation 2” cloud infrastructure, which is faster than most other major cloud providers. The deal also includes a $5 billion donation to an educational fund in Texas.
TikTok and Oracle are slated to meet with President Donald Trump later this week. They are also slated to present their deal to the Committee on Foreign Investment in the United States, or CFIUS. The committee will make a recommendation to Trump.
Trump has made national security concerns one of his top priorities, and TikTok is the latest target in his ongoing quest to crack down on China. According to Trump, the company is collecting user data for Beijing. However, TikTok has disputed the claims, saying the company has never been tapped by the government.
The deal isn’t completely sorted out yet, but it may be that TikTok and Oracle have come up with a deal that will satisfy Trump. He wants a “big contribution” from TikTok, and a portion of the company’s ownership will eventually pass to the U.S. The company’s global headquarters will stay in the U.S., and four of the five board members will be American.
The new TikTok Global company will be listed on the US stock exchange. It will also offer a social network to 100 million Americans. TikTok will pay popular influencers to create videos for the platform. In addition, TikTok will be responsible for an educational initiative, and will contribute $5 billion to an educational fund in Texas.
Data is stored in the US with backups in Singapore
Earlier this month, TikTok announced that it is taking “critical steps” to address US concerns regarding data access. This includes a plan to store all US user data on Oracle’s servers in the United States. This is part of a longer-term strategy to address US concerns regarding data integrity and Chinese ownership.
In addition to this, TikTok has taken steps to stop certain data from flowing to China. This includes developing a data management protocol and working with Oracle to create a protocol for evaluating data handling. The two companies have been working on these strategies for months.
Aside from this, TikTok has set up a US-based data security team, which has been ring-fenced from the parent company, ByteDance. According to the company, the team has the power to decide who has access to user data.
While this is a significant move, there are still questions about whether TikTok will be able to block data from its employees in China from accessing US user data. TikTok is currently negotiating a contract with the Committee on Foreign Investment in the United States (CFIUS), and the committee has not commented on the plan.
One of TikTok’s executives testified in a Senate hearing in October 2021. He claimed that a U.S.-based security team makes decisions about who has access to user data. He said the team is able to make these decisions in consultation with Chinese colleagues.
According to BuzzFeed News, based on audio recordings of internal TikTok meetings, TikTok employees claimed that ByteDance employees in China had accessed user data. This was not possible without the permission of the company. However, TikTok employees said that Chinese engineers were essential to app development.
ByteDance owns TikTok’s US operations
Earlier this year, TikTok, the Chinese app that is one of the most popular video services in the U.S., was under intense scrutiny due to its data privacy practices. A new report by BuzzFeed News uncovered that ByteDance, the app’s parent company, accessed nonpublic user data from American TikTok users.
TikTok’s parent company, ByteDance, is a major player in China’s tech scene. But the company is also facing pressure from the Chinese government, which recently seized ownership of a ByteDance subsidiary.
The company allegedly accessed nonpublic user data from US TikTok users several times over the years, despite saying it stores all user data in the U.S. The company reportedly sought a minority stake in TikTok’s American operations. But then, the deal fell through.
TikTok’s parent has a strong presence in China’s tech scene, and has been criticized for its data privacy practices. The company has long pushed Chinese media companies to use its platforms in a highly censored manner. The company has also required them to remove apps that were deemed “harmful” to Chinese users.
In the wake of the Chinese government’s heightened scrutiny of tech companies, several antitrust investigations have targeted Tencent and Alibaba. CCP, the Chinese government, has also imposed multi-billion-dollar fines on domestic tech companies.
TikTok has responded to data privacy concerns by stating that its actions are in line with European rules. But a report by Internet 2.0 found that TikTok collects excessive amounts of user data.
TikTok has also responded to data privacy concerns by stating that it stores all user data in the United States. However, it is possible that the Chinese government has purchased user data from data brokers in the United States.
ByteDance exec’s role as face of the company
Several TikTok employees have complained that ByteDance executives in Beijing are interfering with US operations. They say that ByteDance executives are focusing on data security risks and not on their US consumers, a claim that TikTok executives reject. They also say that TikTok’s management in Beijing is proactively trying to censor their company.
The Trump administration has been making noises about TikTok’s potential to be a security threat. Trump’s administration has argued that TikTok could provide Chinese officials with information about the U.S. and its people, and that the app could help the Chinese government access data about American users. In response, TikTok is hiring a team in the United States that will be part of a project called Project Texas.
TikTok, which was founded in 2012 in Beijing, has since moved its headquarters to Mountain View, Calif. It now has more than a billion users worldwide, and the company has launched more than 140 apps, across 11 verticals. In its first three years, most of the company’s efforts were focused on text-content experiments. However, in 2015, ByteDance launched several apps in foreign markets. It also experimented with photo-content experiments.
In May, ByteDance co-founder Zhang Yiming announced his departure from the company. He was succeeded by Liang Rubo. Both Zhang and Liang met in college. They were college roommates. After graduating, Zhang co-founded ByteDance in 2012. Liang served as ByteDance’s chief technical officer and global head of human resources.
The company also announced that it had added four seats to its board. It will now have nine directors. According to ByteDance, its board members include Sequoia Capital, General Atlantic and Carlyle Group.
ByteDance’s relationship with CFIUS
Whether or not ByteDance’s deal with Oracle will be approved by the Committee on Foreign Investment in the United States (CFIUS) is still up in the air. In August, the company filed a lawsuit against the administration. It alleged that the government did not follow “due process” in assessing the company’s national security risks.
CFIUS is an interagency committee comprised of several U.S. federal government agencies that evaluates foreign investment transactions and determines whether they present national security risks. Historically, the committee focused on companies with military or intelligence connections, but more recently, high-tech intellectual property and user data has become a greater concern.
In the case of ByteDance, CFIUS has reviewed the company’s records, information systems, and IT infrastructure. CFIUS has also interviewed officers and inspected property and networks under the company’s control.
In addition to examining whether ByteDance’s TikTok operations are independent of the company, CFIUS may also consider whether ByteDance’s data-collecting practices and censorship decisions are in line with U.S. data protection regulations. CFIUS may also require ByteDance to follow restrictive protocols.
CFIUS has reviewed ByteDance’s plans to collect data on U.S. users and the company’s relationship with U.S. military personnel. CFIUS has also reviewed TikTok’s censorship of protests in Hong Kong.
In an effort to resolve CFIUS’ concerns, ByteDance had hoped to migrate U.S. user data to Oracle’s servers. However, the company was stopped by President Joe Biden.
ByteDance is now trying to shake off the “Chinese” label. It has been the subject of an unusual post-transaction review by CFIUS. Specifically, the company is now attempting to set up an American subsidiary to operate TikTok. It also has been negotiating with Oracle to acquire a minority stake in TikTok. The company will also have to divest its U.S. assets by November 12, 2020.