“A U.S. plan to force the sale of TikTok’s American operations to a group including Oracle and Walmart has been shelved indefinitely, people familiar with the situation said, as President Biden undertakes a broad review of his predecessor’s efforts to address potential security risks from Chinese tech companies,” WSJ writes.
Why It Matters: Toward the end of last year, President Trump levied restrictions against TikTok and other Chinese apps citing national security concerns. In a salvaging effort for all parties involved, Trump laid the groundwork for the Oracle-Walmart partnership to absorb some form of TikTok’s U.S. business (though it was unclear how the final deal would have worked). The deal has since languished thanks to successful legal challenges by TikTok parent ByteDance.
- The Biden administration is now doing its own national security assessment and no imminent decision on how to resolve the issue is expected.
Constructive Thinking: “Talks between the Committee on Foreign Investment in the U.S. and TikTok to resolve the situation have continued, according to the people familiar with the matter, one of whom said possible solutions include use of a trusted third party to manage TikTok’s data, which wouldn’t require an outright sale.”
- However, TikTok is no longer facing the threat of an imminent shutdown, meaning any deal would likely be different than the one discussed last fall. It likely won’t feature the $5 billion education fund Trump had said Oracle-Walmart was planning to include.
- It also would require the approval of Chinese regulators, who last year enacted new rules classifying TikTok’s algorithm as restricted technology.
Ahead We Look: Oracle and Walmart could still find a possible deal, but it depends how much of Trump’s work Biden chooses to continue. Later this month, the government has to formally respond to TikTok’s court challenge against Trump’s executive order. Meanwhile, another executive order from Trump banning U.S. transactions with eight Chinese apps is set to go into effect next week.