Trump Administration Says it Will Review Deal After Oracle Confirms Partnership with TikTok
Oracle Corporation has triumphed over Microsoft and Walmart in the contest for the U.S. operations of TikTok. Although negotiations over TikTok's future have largely centered around an outright acquisition, the short-form video app's Chinese parent company ByteDance has chosen the Bay Area software giant as its "trusted technology provider," the company confirmed Monday.
The terms of the deal have not been disclosed. After pushing for TikTok's sale to a U.S. company, President Donald Trump threw his support behind Oracle in mid-August. Oracle's cofounder and CTO Larry Ellison has said he supports Trump and held a campaign fundraising event for him in February.
A TikTok spokesperson said Monday that the company has submitted a proposal to the Treasury Department that would "resolve the administration's security concerns" and let it continue to support its community of 100 million people in the U.S., including those whose livelihoods rely on TikTok.
The news marks the next step in a saga that placed TikTok at the center of the U.S.-China trade war. TikTok's popularity was evidenced earlier this year when the app set a new record for most quarterly downloads. By then, it was facing increased scrutiny from the U.S. and other governments over data security and privacy concerns and worries about foreign interference. Those concerns escalated when the app was banned in India, one of its largest markets, and President Trump issued two executive orders to force ByteDance's hand.
The first, dated August 6, banned any "transaction" by any person or entity with ByteDance and TikTok in 45 days, or after Sept. 20. According to the order, the U.S. Secretary of Commerce will identify exactly which transactions are included in the order, the same day it goes into effect,.
The second order, issued eight days later, mandated that ByteDance divest any assets or property that enable its TikTok operations in the U.S., along with any data collected via the app in the country. It goes into effect within 90 days of the order's issuance, with a possible extension of up to 30 days.
Negotiations slowed briefly when the Chinese government issued new rules in late August limiting what Chinese companies can export. Given the new rule, it's unclear whether Oracle would gain access to TikTok's algorithm for content recommendations, arguably the heart of the application.
Oracle said ByteDance submitted the proposal to the U.S. Treasury Department over the weekend. Treasury Secretary Steven Mnuchin said on CNBC Monday that Oracle's proposal includes making TikTok global a U.S. headquartered company, bringing 20,000 new jobs with it.
The Committee on Foreign Investment in the United States will review the proposal this week for national security implications and make a recommendation to the president, Mnuchin said.
This is not the first time the Trump administration has objected to Chinese-owned companies' presence in the U.S. due to national security concerns. The president banned commercial trade with Chinese telecom giants Huawei Technologies Co and ZTE Corp in a May 2019 executive order, citing the same International Emergency Economic Powers Act that he invoked in the TikTok orders. A year later, this past May, Trump extended that ban to May 2021.
The bans have cost the Chinese companies potentially billions in lost revenue and handicapped their efforts to expand.
In June of this year, the Federal Communications Commission designated the Chinese companies as national security threats, which prohibits U.S. companies from accessing an $8.3 billion government fund if they use telecom equipment from Huawei or ZTE.
FCC Chairman Ajit Pai said then that Chinese law obligates companies to cooperate with their country's intelligence services, which is a U.S. national security risk.
Trump's ban on Huawei and ZTE uses the same legal justification as the TikTok ban, but the effects are likely to be different.
American telecom firms were relatively late to developing 5G technology and are competing with the Chinese telecom giants for the upper hand in controlling these networks, over which massive swathes of the world's data will travel. Among consumers, ZTE and Huawei have never been popular in the U.S.. TikTok has flourished as a place for free expression in the U.S. market and a favorite app of Gen Z.
West Hollywood-based Grindr Inc., host of the popular gay dating app and another social app, was also forced to cut ties with its Chinese ownership.
The company sold a majority stake in 2016 to Chinese gaming company Beijing Kunlun Tech, which then fully acquired the app in 2018. But the Committee on Foreign Investment in the United States ordered the Chinese company to divest from Grindr due to national security concerns. In May, Reuters reported that the U.S. national security panel approved a $620 million sale to an American investor group called San Vicente Acquisition.
A TikTok Timeline: The Rise and Pause of a Social Video Giant
TikTok | Solen Feyissa | Flickr
See our timeline below for key points in how TikTok's story has developed over the last eight years, starting with the founding of ByteDance, its rising popularity and the mounting concerns about privacy and security.
March 2012: Internet entrepreneur Zhang Yiming founds ByteDance in Beijing.
August 2012: ByteDance launches its first product, Toutiao, an AI-powered news aggregator.
July 2014: Alex Zhu launches Musical.ly, an app that enables users to create short-form lipsync music videos; Musical.ly is headquartered in Shanghai with an office in Santa Monica.
July 2015: Musical.ly hits #1 in Apple app store.
September 2016: ByteDance launches Douyin, an app with similar functionality as Musical.ly; within a year, the Chinese app achieves 100 million users and 1 billion views/ day.
September 2017: ByteDance brings Douyin outside of China's Great Firewall under the name of TikTok; the app does well in numerous Asian markets.
November 2017: ByteDance acquires Musical.ly for $1 billion; the company starts operating Musical.ly in the US, Douyin in China and TikTok in other markets.
August 2018: ByteDance merges Musical.ly with TikTok and migrates all user profiles to TikTok; Alex Zhu becomes TikTok senior vice president, saying, "Combining Musical.ly and TikTok is a natural fit given the shared mission of both experiences – to create a community where everyone can be a creator."
October 2018: ByteDance achieves a record $75 billion valuation, making it the world's biggest privately backed startup.
February 2019: Lil Nas X releases "Old Town Road" on TikTok, catalyzing a viral sensation that ultimately reaches #1 on Billboard's charts.
February 2019: TikTok is fined $5.7 million for child data privacy violations.
September 2019: Washington Post reports that TikTok may be censoring protests in Hong Kong.
September 2019: Leaked documents show TikTok instructs its moderators to censor videos that mention various subjects deemed offensive by the Chinese government and Commuist Party, The Guardian reports.
October 2019: U.S. Senator Marco Rubio calls on the U.S. government to investigate the national security implications of ByteDance's acquisition of Musical.ly, citing concerns over the Chinese government and Communist Party's use of TikTok to censor content and silence open discussion.
October 2019: U.S. Senators Chuck Schumer and Tom Cotton ask U.S. Acting Director of National Intelligence to assess the national security risks from TikTok and other Chinese-owned apps, and request a congressional briefing on the findings.
October 2019: Alex Zhu begins reporting directly to ByteDance head Zhang Yiming; he had previously reported to the head of Douyin.
November 2019: The U.S. government launches an investigation into ByteDance's acquisition of Musical.ly on the grounds that ByteDance did not seek clearance when it acquired Musical.ly.
TikTok reportedly has 26.5 million monthly active users in the U.S. at this time.
December 2019: The U.S. Defense Department's Defense Information Systems Agency issues a recommendation that military personnel delete TikTok from all smartphones.
Q4 2019: TikTok becomes the most downloaded app in the world and second in the U.S.
January 2020: Several U.S. military branches ban TikTok on government-issued smartphones.
March 2020: U.S. officials reach out to TikTok to discuss political disinformation.
April 2020: TikTok surpasses 2 billion downloads and sets the record for quarterly downloads.
May 2020: Various child privacy groups file a complaint with the U.S. Federal Trade Commission that TikTok is violating the Children's Online Privacy Protection Act (COPPA) and flouting terms agreed to following its February 2019 settlement.
A TikTok spokesperson says the company "takes the issue of safety seriously for all our users, and we continue to further strengthen our safeguards and introduce new measures to protect young people on the app."
May 2020: ByteDance hires former Disney executive Kevin Mayer as chief operating officer and TikTok chief executive officer.
June 2020: Teens organize on TikTok to fool Trump administration into anticipating high attendance for the President's Tulsa, Oklahoma campaign rally.
June 2020: India bans 59 Chinese apps including TikTok, citing national security and data privacy concerns; the move comes amid ongoing skirmishes between the two countries on the China-India border.
July 2020: Australia Prime Minister Scott Morrison launches an investigation into TikTok surrounding data concerns.
July 2020: U.S. Secretary of State Mike Pompeo confirms the U.S. is looking into banning TikTok over concerns the app is sharing data with China; the next day, President Trump says he is considering a ban, framing it as a potential retaliation tactic against China for its handling of the coronavirus pandemic.
Aug. 2, 2020: Microsoft issues a blog post citing a conversation between chief executive Satya Nadella and President Trump around the company's potential acquisition of TikTok.
Aug. 4, 2020: Australia Prime Minister Scott Morrisson says there is not sufficient evidence to suggest a TikTok ban is necessary.
Aug. 6, 2020: President Trump issues an executive order banning American companies from transacting with ByteDance or its subsidiaries, namely TikTok; the U.S. Secretary of Commerce is to identify specific prohibited "transactions" 45 days after the order is issued.
Aug. 14, 2020: Trump issues another executive order demanding ByteDance "divest all interests and rights" in its assets and property that enable TikTok's U.S. operations, and data collected via TikTok in the U.S., within 90 days. The order says the U.S. investigation into ByteDance's acquisition of Musical.ly presented "credible evidence" that ByteDance "might take action that threatens to impair the national security of the United States."
Aug. 17, 2020: Oracle enters the discussion as a reported TikTok suitor.
Aug. 18, 2020: President Trump says he would support Oracle buying TikTok. Oracle's cofounder and CTO Larry Ellison had previously said he supports Trump and had fundraised for him in February 2020.
Aug. 24, 2020: TikTok announces it is suing the Trump administration over the ban for failure to protect due process. Separately, a U.S.-based TikTok employee also sues the administration, stating, "I am a patriot"
Aug. 26, 2020: Kevin Mayer steps down from ByteDance and TikTok, citing a diminished role in a letter to colleagues. Rumors swirl that he was left out of ByteDance's negotiations with potential acquirers
Aug. 27, 2020: Walmart issues a statement that it is interested in partnering with Microsoft to acquire TikTok.
Aug. 28, 2020: L.A.-based Triller, a TikTok upstart competitor, is reported to have issued a bid for TikTok along with investment firm Centricus.
Aug. 29, 2020: The Chinese government issues new export rules that complicate the exportation of TikTok's underlying technology – namely its "For You" algorithm – to any foreign buyer.
Aug. 31, 2020: CNBC reports TikTok has chosen a buyer, with an expected sale price of $20 billion - $30 billion.
Sept. 3, 2020: With uncertainty over whether a buyer will be able to acquire TikTok's algorithm, and debate mounting over how that affects the value of the company, numerous outlets negotiations are likely to slow as the Chinese government increases its involvement.
Sept. 13, 2020: Microsoft says in a blog post that "ByteDance let us know today they would not be selling TikTok's US operations to Microsoft." The company says it would have made "significant changes" to ensure security, privacy, online safety and combatting disinformation.
Sept. 14, 2020: Oracle confirms that it has been selected by ByteDance to become a "trusted technology provider" with TikTok. The company says the proposal was submitted by ByteDance to the Treasury Department over the weekend. Treasury Secretary Steven Mnuchin says on CNBC that the proposal includes making TikTok-global a U.S. headquartered company with 20,000 new jobs.
Mnuchin adds that the Committee on Foreign Investment in the United States is reviewing the proposal this week for national security implications, and will make a recommendation to the president, who will then review the proposal.
- TikTok Employee Asks Judge to Halt Ban on Popular Video App ... ›
- Microsoft's Bid for TikTok Rejected by ByteDance - dot.LA ›
- TikTok's Sale to Walmart Is Reportedly Off, For Now - dot.LA ›
- TikTok Is Experimenting with Ecommerce and Recruiting - dot.LA ›
- Anduril Industries is Building Border Surveillance Tech - dot.LA ›
Subscribe to our newsletter to catch every headline.
Major brands have taken notice, as influencers can garner loyal social media followings that outpace those of many Hollywood celebrities. Meanwhile, some top-tier influencers now make more than S&P 500 CEOs. As more Gen Z creators enter the workforce—looking for opportunities beyond traditional models—the industry is poised to grow at a breakneck pace. We talked with Famous Birthdays founder Evan Britton, whose platform tracks and measures the industry, as well as several emerging influencers about what to watch for over the coming year.
1. Gaming Influencers Grow
There is more gaming content now than ever. According to TwitchTracker, which catalogs streamers, 2021 was the most popular year ever for Twitch, which averaged more than 3.1 million daily viewers at its peak in May 2021. January 2022's numbers (2.9 million) are not far behind.
“Twitch streamers have highly engaged fans,” said Britton. He pointed to Twitter as an example of a platform where many brands and personalities find it “hard to get engagement,” yet where many streamers routinely manage to draw “thousands of likes and comments.”
“Their fans are so engaged with them because they’re watching them for hours on end,” he added. “They just want more content.”
Even though demand for gaming content is up, expect gaming creators to become more strategic about repurposing content in 2022.
“As a streamer, one of the biggest things right now is finding ways to continue to grow while being efficient,” said gamer and Twitch streamer Nick Bartels. In the past, influencers in the gaming world would commit many hours to livestreaming their adventures—but when the game was over, traditionally, so was the stream, and few did anything with the resulting content.
Expect to see creators looking for ways to funnel growth into platforms even when they aren’t streaming. Bartels said he’s looking to work with an editor who can repurpose much of the live content he creates.
“One of the bigger concerns is burnout over air time,” said Bartels. “It’s part of the grind initially, but the last thing you’re going to want to do after you stream is edit. You want to have some life balance.”
TinaKitten/ Famous Birthdays
Famous Birthdays' Gaming Influencers to Watch
2. The Blockchain Provides a New Source of Income and Experimentation
In years past, influencers relied largely on advertising dollars to monetize their massive audiences and provide them with an income. More recently, however, the blockchain—including cryptocurrency and NFTs— have stepped in, providing a new way to create community while growing revenue.
“The growth of cryptocurrency followed by the explosion of NFTs was a big trend in 2021 that will continue into 2022,” said Britton. “Last year, creators sold digital art and communities sold limited edition collectables offering unique access and clout. This year, offerings will become even more creative.”
Britton said one driver of this trend is entertainment and engagement. NFTs, or non-fungible tokens, provide a way for influencers to reward their most engaged users, as well as a way for audiences to literally invest in the creators they love. “I think it’s a fun way for people to get involved and be part of a community,” he noted. As creators build engaged communities of their own, NFTs could provide additional methods for them to monetize.
But there has been a dark side to influencers’ interest in crypto. Earlier this month, Kim Kardashian and Floyd Mayweather were among a number of influencers accused of taking part in an online pump-and-dump crypto scam. TikTok has since banned promotional content related to financial services, including cryptocurrency, by adding them to its list of “globally prohibited industries.”
While it remains to be seen just how effective NFTs will be as an investment tool, expect interest in the space to continue to grow.
Spencers/ Famous Birthdays
Famous Birthdays' Influencers with NFT Projects to Watch
3. More Fun with Food
Food has emerged as a growing subset of the influencer economy, and several new platforms launched in 2021 looking to seize on that growing interest. Restaurants large and small have taken notice.
“One huge tailwind on TikTok has been creators offering up their unique recipes and fun takes on food,” said Britton, who expects this trend to build throughout 2022. “TikTok is about fun, short videos. Everybody loves food and a lot of people like making food. It just has a lot of natural product-market fit with TikTok.”
Videos showing food can be instrumental in convincing consumers to try new restaurants or menu items. In a survey by restaurant marketing firm MGH, 36% of TikTok users said they have visited or ordered food from a restaurant after seeing a TikTok video featuring that establishment.
Influencer Cassie Sharp found success in 2021 by creating bite-sized content around food challenges, like her popular “five random ingredients” challenge.
“I’m trying to find new challenges that garner similar engagement, and take short-form videos and turn them into long-form content so that I can take some of those views on my shorts and apply them on my long-form videos,” she said, highlighting a trend common among creators in all verticals: repurposing content.
“The greatest thing about short-form content is you can throw it out there and see what catches,” Sharp added. “If I get an audience for a specific short-form video, when I start making long-form videos people are already comfortable with it.”
Her biggest takeaway so far: Clear bowls are essential for creating engaging food videos. “It’s just more interesting to watch the butter and brown sugar melt together,” she said.
Lisa Nguyen/ Famous Birthdays
Famous Birthdays' Food-Focused Influencers to Watch
4. Social Shopping Upends Ecommerce
The pandemic helped cement ecommerce’s rapidly growing advantage over brick-and-mortar shopping. As more influencers take to livestreaming platforms, expect the nature of online shopping to change.
“Facebook, Instagram and TikTok each facilitate live-shopping and YouTube launched livestreams to promote shopping ahead of the 2021 holiday season,” noted Britton, who added that he expects live-shopping to become increasingly popular in 2022. “It took a while to get here, but it’s growing.”
Gen Z is certainly keen to buy in real time. Survey results from the 2022 Instagram Trend Report show 27% of users aged 13 to 24 shop directly on social media.
Instagram’s native affiliate tool is just one example of this trend in action. The platform began testing the tool in 2021, incentivizing creators to include shoppable content not just in their feeds but also in their Instagram Stories and livestreams.
Nathaly Cuevas/ Famous Birthdays
Famous Birthdays' Ecommerce Influencers to Watch
Correction: An earlier version of this story misspelled Nick Bartels' last name.
- The Creator Economy and Social Commerce Will Boom in 2022 ... ›
- TikTok, Influencer Panic and the Celebrity Economy - dot.LA ›
- The Creative Economy Exploded in 2021. - dot.LA ›