Tiktok pro­poses cre­at­ing new U.S. head­quar­ters and adding 20,000 jobs

Video app tries to win over Trump and ad­dress his se­cu­rity con­cerns

The Washington Post - - THE CORONAVIRU­S PANDEMIC - BY JAY GREENE jay.greene@wash­post.com Rachel Ler­man and Ellen Nakashima con­trib­uted to this re­port.

Tiktok of­fered to cre­ate a new U.s.-based com­pany and add 20,000 jobs in a bid to win over U.S. gov­ern­ment sup­port for its pro­posal to ad­dress Pres­i­dent Trump’s se­cu­rity claims and keep its short-form video app op­er­at­ing in the coun­try.

Trea­sury Sec­re­tary Steven Mnuchin re­vealed a few de­tails in an ap­pear­ance on CNBC on Mon­day morn­ing, also cor­rob­o­rat­ing that Or­a­cle was in­volved in the pro­posal.

“I want to be care­ful what I say, but 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. “There’s also a com­mit­ment to cre­ate Tiktok Global as a U.S. head­quar­tered com­pany with 20,000 new jobs.”

Tiktok runs its U.S. op­er­a­tions from Cul­ver City, Calif., just west of Los An­ge­les. The Wash­ing­ton Post pre­vi­ously re­ported that Tiktok ap­proached the ad­min­is­tra­tion with a mit­i­ga­tion pro­posal.

While Mnuchin didn’t go into de­tail about the pro­posal, peo­ple fa­mil­iar with the talks who spoke on the con­di­tion of anonymity to dis­cuss them can­didly told The Post that the pro­posed ar­range­ment would al­low its par­ent com­pany, Bytedance, to re­tain own­er­ship but out­source man­age­ment of data to Or­a­cle’s cloud-com­put­ing op­er­a­tions. If a deal along that struc­ture wins ad­min­is­tra­tion ap­proval, it would rep­re­sent a sig­nif­i­cant step back from what the pres­i­dent de­manded when he first threat­ened to ban the app in the United States in July. At the time, Trump pushed to force the sale of Tiktok’s U.S. op­er­a­tions to an Amer­i­can com­pany.

Or­a­cle emerged as the un­likely vic­tor Sun­day af­ter­noon to work with Tiktok to try to sat­isfy both the U.S. and Chi­nese gov­ern­ments, beat­ing out a ri­val bid from Mi­crosoft. Trump pre­vi­ously is­sued an or­der that would ban the app in the United States be­gin­ning Sept. 20 over na­tional se­cu­rity con­cerns. He fol­lowed that with a sec­ond or­der that would es­sen­tially re­quire ByteDance to di­vest from its op­er­a­tions in the United States.

Mnuchin didn’t say that Or­a­cle would take an own­er­ship po­si­tion, but he said it would serve as “the trusted tech­nol­ogy part­ner.”

In a state­ment, Tiktok spokes­woman Hi­lary Mc­quaide said, “We can con­firm that we’ve sub­mit­ted a pro­posal to the Trea­sury Depart­ment which we be­lieve would re­solve the Ad­min­is­tra­tion’s se­cu­rity con­cerns.”

In a state­ment after Mnuchin’s com­ments, Or­a­cle spokes­woman Deb­o­rah Hellinger con­firmed that “it is part of the pro­posal sub­mit­ted by Bytedance to the Trea­sury Depart­ment over the weekend in which Or­a­cle will serve as the trusted tech­nol­ogy provider.”

Or­a­cle is an un­usual choice given that it has no con­sumer busi­ness. The com­pany is mas­sive but pro­vides busi­ness soft­ware, such as data­base ser­vices, that com­pa­nies use to run their op­er­a­tions.

But Or­a­cle’s close re­la­tion­ship with Trump may have given it an up­per hand, as it beat out Mi­crosoft to work with Tiktok. Or­a­cle’s chief ex­ec­u­tive, Safra Catz, has dined at the White House with Trump and served on the pres­i­dent’s tran­si­tion team after his elec­tion in 2016. Or­a­cle co­founder and chair­man Larry El­li­son hosted a fundraiser for Trump this year.

Mnuchin said the ad­min­is­tra­tion “had a lot of confidence in both Mi­crosoft and Or­a­cle.”

He would only say that na­tional se­cu­rity re­mains the pri­or­ity and that reg­u­la­tors will dis­cuss the pro­posal with Or­a­cle “over the next few days.”

“A crit­i­cal fac­tor for us, driv­ing na­tional se­cu­rity, is mak­ing sure that the tech­nol­ogy on Amer­i­cans’ phones is safe and mak­ing sure that it is not cor­rupt,” Mnuchin said.

Tiktok has re­peat­edly in­sisted that it is not a na­tional se­cu­rity threat and that it does not share any U.S. cus­tomer in­for­ma­tion with the Chi­nese gov­ern­ment.

The new pro­posal will be taken up by the Com­mit­tee on For­eign In­vest­ment in the United States, which re­views na­tional se­cu­rity im­pli­ca­tions of for­eign in­vest­ments.

“Then we’ll be mak­ing a rec­om­men­da­tion to the pres­i­dent and re­view­ing it with him,” Mnuchin said.

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