The race to divest TikTok to an American developer has been headline news for most of the summer. President Trump signed an executive order last month ordering the sale of TikTok to a U.S.-based company within 45 days or the app would be shut down in the United States citing a national security threat. TikTok then retaliated with a lawsuit, but experts argued that it was likely to buy time rather than stop the acquisition altogether. Both The Wall Street Journal and the Associated Press reported this week that Oracle will be purchasing the app after ByteDance rejected Microsoft’s previous bid for operations. The company, however, will not be selling its popular algorithm to Oracle as part of the reported deal.
TikTok, which currently operates as a subsidiary of China’s ByteDance tech company, claims that it does not give data to the Chinese government. A Chinese Communist Party law targeting tech companies means that they could theoretically be forced to submit data if they were asked to do so. As a result, President Trump’s executive order was meant to prevent any data collected on TikTok from falling into the hands of the Chinese Communist Party. There are speculations that the forced deal was also meant to give the data and controlling power of one of the world’s leading social media apps into the hands of the American economy. Regardless of the true reasoning, ByteDance was forced to divest its ownership in TikTok or face being blacklisted from operations in the United States.
Microsoft was reportedly in line to purchase the app as soon as the news broke that it would have to sell to an American company. But after TikTok reportedly shot that deal down last week, the ownership will instead be sold to to the software and cloud operations company, Oracle. Oracle has reportedly been called a ‘trusted tech partner’ by TikTok, according to the Wall Street Journal, meaning that it will be granted ownership of the social network by the September 20th deadline.
No details about the sale price have been revealed thus far, and the Associated Press even revealed that Oracle is not calling the acquisition a sale, signaling that it could mean that the company will instead operate as a U.S. partner with ByteDance (though this is pure speculation). The U.S. government will reportedly review the deal before the September 20th deadline, meaning that things are not likely set in stone until everything has been approved.
Both Oracle and TikTok have revealed that the supposed sale or partnership will not include TikTok’s For You Page content boosting algorithm. The algorithm is partly what makes TikTok so popular among both creators and users because it boosts content from creators that users are not already following. The algorithm introduces users to new things while reinventing the playing field that is social media virality. Though ByteDance will not sell the source code of the algorithm, it is likely that any new owner would try to re-create the For You Page model at least to some capacity in order to avoid sparking major changes to the apps functionality overnight. Already, users are worried that the app’s sale will forever change its interface.
The entire acquisition depends on approval from President Trump, who is critical of any role that China has over the apps operations. Steve Mnuchin, the United States Secretary of the Treasury said to the Wall Street Journal that the acquisition would need to be reviewed upon before it gets approved, making sure that both the code and data acquired by TikTok is secure. Should the deal be shot down, TikTok might decide not to sell the app to an American developer at all and risk the threat of going dark in the United States according to the South China Morning Post. However, the source of that information has not been revealed.
The TikTok algorithm is likely what makes up a large part of its value because it was what made the app so popular in the first place. Without the algorithm, a new TikTok owner will have to recreate the code as closely as possible or face the possibility of users heading elsewhere for short form video content. Facebook’s TikTok competitor Instagram Reels launched last month with less than enthusiastic reviews, but major changes to the TikTok algorithm could leave the app in a similar position.
While users were hungry for a short form video sharing social media platform, the algorithm was what set TikTok apart from a sea of competitors after Vine was shut down in 2016. Plus, if ByteDance keeps the algorithm, what would be stopping it from re-creating the TikTok platform on a new app? Yes TikTok has millions of monthly active users in the United States, but the threat of a ban already has creators on the app scrambling to find a new way to connect with fans. Any major overnight changes to the algorithm could be the final push that creators need to seek out a new app, and since TikTok has only revealed small amounts of information about how its algorithm works in the first place, recreating it could be a bit tricky.