TikTok wins US life­line as Trump and China warm to Or­a­cle deal

Trump ad­min­is­tra­tion’s move to block TikTok and WeChat down­loads on se­cu­rity grounds takes a leaf out of China’s play­book

The Daily Telegraph - Business - - Front Page - By Michael Cog­ley and Lau­rence Dodds in San Fran­cisco ByteDance is to own the re­main­ing 80pc of the new com­pany, but it will still be ma­jor­ity US-owned, given the Chi­nese firm’s ex­ist­ing in­vestors. Mr Trump also claimed the deal in­cluded $5bn (£3.9bn) fro

TIKTOK’S fu­ture in the United States ap­peared rosier yes­ter­day af­ter a last-minute deal to save the vi­ral video app won both the “bless­ing” of pres­i­dent Don­ald Trump and the cau­tious praise of China’s state me­dia.

Mr Trump said on Satur­day that he had “ap­proved the deal in con­cept” and ex­tolled it as a “great deal for Amer­ica” with “100pc” se­cu­rity. TikTok also con­firmed the agree­ment.

The next day, the Chi­nese Com­mu­nist Party’s Global Times news­pa­per de­scribed the deal as “still un­fair [but] rel­a­tively more rea­son­able”.

The plan still needs to be ap­proved by Chi­nese of­fi­cials. Mr Trump had pre­vi­ously or­dered the app to be banned over na­tional se­cu­rity con­cerns un­less its Chi­nese par­ent ByteDance sold out of its US in­ter­ests within 90 days. The cur­rent bar­gain would see TikTok’s 100m US users gov­erned by a new com­pany called TikTok Global, with 20pc owned by the Cal­i­for­nian cloud com­put­ing firm Or­a­cle and su­per­mar­ket gi­ant Wal­mart.

Such an ar­range­ment could al­lay Wash­ing­ton’s con­cerns by rout­ing US users’ data through Or­a­cle, while obey­ing new Chi­nese ex­port re­stric­tions by let­ting ByteDance keep con­trol of rec­om­men­da­tion al­go­rithms.

A par­al­lel at­tempt by the pres­i­dent to ban the pop­u­lar Chi­nese mes­sag­ing app WeChat was halted yes­ter­day by a US judge, who ex­pressed con­cerns about free speech.

Ac­cord­ing to Reuters,

It is not il­le­gal or im­pos­si­ble to use Face­book in China, sim­ply in­con­ve­nient. The so­cial net­work’s app is not avail­able for down­load in the Chi­nese ver­sion of Ap­ple’s App Store, nor on the many al­ter­na­tives on the An­droid op­er­at­ing sys­tem. Even if the app is in­stalled on a phone, it would not work: in­ter­net providers in the coun­try have blocked the com­pany’s servers for sev­eral years.

Nonethe­less, peo­ple in China with a lit­tle tech­ni­cal know-how do use Face­book. One must al­ter the App Store’s re­gional set­tings to a dif­fer­ent coun­try, and use a vir­tual net­work app to route in­ter­net traf­fic through servers out­side of China. They must do the same for a flurry of other apps banned in the coun­try, in­clud­ing Google, Net­flix and Twit­ter.

To­day, smart­phone own­ers in Amer­ica face the prospect of us­ing a sim­i­lar set of tac­tics if they want to ac­cess one of the world’s most pop­u­lar apps. On Fri­day, the US gov­ern­ment said Ap­ple and Google would have to re­move TikTok, the pop­u­lar video app, and WeChat, the mes­sag­ing app used by the Chi­nese di­as­pora to talk to friends and rel­a­tives back home, from their re­spec­tive app stores. More force­ful mea­sures that would block the apps from work­ing at all by block­ing traf­fic on US in­ter­net net­works were also planned, al­though in TikTok’s case this was not due to hap­pen un­til Novem­ber.

Both ban or­ders were jus­ti­fied on na­tional se­cu­rity grounds. TikTok and WeChat are owned by the Chi­nese com­pa­nies ByteDance and Ten­cent, and the re­al­i­ties of Bei­jing’s le­gal sys­tem mean there would be lit­tle in the­ory that would stop the com­pa­nies hand­ing over data to the Chi­nese gov­ern­ment.

Over the week­end, both bans were de­layed. Don­ald Trump ap­proved a sal­vage deal for TikTok in which the Sil­i­con Val­ley com­pany Or­a­cle would host and se­cure user data in the US. WeChat’s ban was put on hold when a group of users who had launched a le­gal chal­lenge to the or­der won a tem­po­rary sus­pen­sion of it.

How­ever, both bans re­main a pos­si­bil­ity. China must also ap­prove ByteDance’s Or­a­cle deal, and may be less re­cep­tive to it than the Trump ad­min­is­tra­tion, while the WeChat or­der could re­turn if the le­gal chal­lenge is ul­ti­mately struck down.

In that sce­nario, the Amer­i­can in­ter­net would start to look a bit more like the Chi­nese one.

If TikTok were banned from app stores, its Amer­i­can users, who num­ber more than 100 mil­lion, would not no­tice an im­me­di­ate dif­fer­ence, since they al­ready have the app in­stalled.

But since they would not have ac­cess to the up­dates that pro­vide se­cu­rity fixes, per­for­mance up­grades and new fea­tures, the app would grad­u­ally fall apart, even be­fore the Nov 12 dead­line for in­ter­net providers to block it.

This would not be the end for TikTok, but users would have to adopt a sim­i­lar set of sub­terfuge tac­tics to the Chi­nese denizens that wish to use Face­book. Over the week­end, so­cial me­dia – in­clud­ing TikTok it­self – was awash with posts on how to use vir­tual net­works and to switch coun­tries on down­load stores.

If the ban goes through, ex­pect the num­ber of Ap­ple ac­counts reg­is­tered in Canada to ex­ceed the num­ber of Cana­di­ans, as Amer­i­cans dig­i­tally cross the bor­der to a re­gion where the app is still avail­able.

The app’s in­cred­i­ble pull will make these in­con­ve­niences worth it to a por­tion of its es­tab­lished base.

It may not come to that. Or­a­cle’s res­cue deal for TikTok may suc­ceed, and courts deny Trump his WeChat ban.

But the saga has shown Trump is set­ting a prece­dent that will be dif­fi­cult to walk back. He is will­ing to use a form of in­ter­net con­trol – block­ing and ban­ning ser­vices that are deemed sus­pi­cious – that takes its cue from China.

Even the rem­edy for TikTok, a data stor­age part­ner­ship with an Amer­i­can com­pany, seems in­spired by the way Xi Jin­ping re­quires for­eign com­pa­nies to op­er­ate.

For Ap­ple to op­er­ate in China, for ex­am­ple, it must store iCloud data on servers man­aged by a sub­sidiary of state-owned China Tele­com. West­ern com­pa­nies that wish to op­er­ate there must of­ten do so through a joint ven­ture with a do­mes­tic, of­ten state-backed, com­pany.

China and the US are not equiv­a­lent, of course. The fact that courts can block the gov­ern­ment’s WeChat ban demon­strates that.

And there are cer­tainly rea­sons to be sus­pi­cious of the two apps. Re­searchers have found WeChat in par­tic­u­lar be­ing used as a tool of Bei­jing’s cen­sor­ship even out­side China.

But the ap­proach to tack­ling them could take a dif­fer­ent path. TikTok could be re­quired to sub­mit to rig­or­ous tech­ni­cal ex­am­i­na­tions of its source code and data cen­tres to back up the com­pany’s claims that user in­for­ma­tion does not flow to China.

WeChat might be asked to im­ple­ment en­cryp­tion pro­to­cols to limit how the com­pany can spy on com­mu­ni­ca­tions.

In­stead, the White House has merely fol­lowed Bei­jing’s play­book. When we talk about the “splin­ter­net” – the idea that the in­ter­net in dif­fer­ent parts of the world is be­com­ing Balka­nised – we nor­mally think in terms of a walled off and man­aged Chi­nese in­ter­net and a free and open one led by the US.

Last week’s ac­tions saw the lat­ter take a step towards the for­mer. Other coun­tries will use it as jus­ti­fi­ca­tion to fol­low.

‘Don­ald Trump is set­ting a prece­dent that will be dif­fi­cult to walk back’

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