(Bloomberg) – Zhang Yiming, founder of the parent company TikTok ByteDance Ltd., shows Donald Trump that he also knows something about making deals.
In its offer to cooperate with Oracle Corp. to address U.S. security concerns over the video-video app, a Chinese businessman is proposing to Trump what the president has already declared unacceptable. The question now is whether Trump rejects the offer, agrees, or perhaps most likely, for the man behind the “Art of Bargaining”; to open compromise talks.
The president said TikTok should be sold to the American owner – or closed. Instead, Zhang offered a partnership with Oracle that would allow ByteDance to retain majority ownership of the business, while the US software giant became its “trusted technology provider” to protect user data. Trump said Tuesday’s decision would be made “soon,” and a security panel had convened to consider the proposal.
The final details are changing, but ByteDance venture capitalists may also be involved in equity in TikTok’s business. It is also possible that the Chinese father will try to retain full ownership of the unit, according to one person familiar with the discussions.
The Chinese hawks quickly declared the offer dead upon arrival. Sen. Josh Hawley, a Republican from Missouri, wrote a letter to the US Treasury Secretary saying the administration should “immediately abandon” the partnership and push the Chinese father to work out a “more acceptable solution.”
Zhang’s first gambit may simply be aimed at gaining more time trying to survive the clash of two world superpowers. He starts from a tough stance to open negotiations and avoid the immediate closure of TikTok. This is a lesson that could be learned directly from Trump’s memoirs in his days of real estate.
“The worst thing you can do in a deal seems desperate,” the president wrote in his best-selling autobiography with Tony Schwartz. “It makes another guy smell blood, and then you’re dead.”
Zhang suggests a few things that may resonate with Trump. Finance Minister Stephen Mnuchin said ByteDance’s proposal on Monday would create 20,000 jobs and bring TikTok Global headquarters to the United States, presumably all of the video program’s international activities. Trump has made creating a job in the country a cornerstone of his election campaign when he heads the presidential election in November.
Zhang has also joined Oracle co-founder Larry Ellison, an ardent supporter of the president who seems to have his trust. This alliance could persuade Trump to accept the deal from Oracle and not from another company.
In August, Trump called Ellison an “extraordinary guy” and praised him again on Tuesday.
“I have a lot of respect for Larry Ellison,” he said. “He’s the one I know, he’s been a really amazing guy for a long time.”
According to two people familiar with the plan, Oracle’s proposal lacks payment to the US government, which the president insisted was a condition of any deal.
Trump has made TikTok a central example of his campaign to crack down on China. He signed an order banning the program in the United States on September 20, and also ruled that ByteDance must sell US video assets by mid-November, as ordered by the U.S. Foreign Investment Committee, or KFIUS.
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In the last weekend of August, Zhang leaned toward Microsoft’s offer, where he worked briefly. The deal called for a full buyout of TikTok USA by software giant and partner Walmart Inc.
But the Chinese government intervened at the last minute with a new set of restrictions on the export of artificial intelligence technologies, including those used in the annex. Beijing has insisted that its regulators must also approve any sales of ByteDance assets.
China’s move was seen as an attempt to give Zhang more leverage. He could not give too much to the Trump administration, otherwise Beijing would not sign.
Instead, Zhang turned to Allison and the Oracle. Redwood City, California, is best known for its enterprise software. Allison is also known for his fierce struggle. When Hewlett Packard fired his CEO for an allegedly inappropriate relationship, Allison called it – publicly – “the worst personnel decision since the idiots on Apple’s board fired Steve Jobs.”
What Zhang and Allison created is nothing more than an agreement envisioned by the Trump administration. Instead of buying the business directly, Oracle is investing in the recently restructured TikTok, said people familiar with the offer. At least two shareholders of China’s parent company TikTok, General Atlantic and Sequoia Capital, would be involved in the new business, said one person, who all asked not to be identified because the terms had not been finalized.
“Based on the information we have at the moment about the Oracle agreement, I can’t say that I’m very reassured,” said Fergus Ryan, an analyst at the Australian Institute for Strategic Policy, Bloomberg Television. “ByteDance is essentially under the finger of the Chinese Communist Party.”
And yet Mnuchin sounded as if the proposal deserved serious consideration.
“We need to make sure the code is reliable, the Americans’ data is secure, the phones are secure, and we will seek to discuss with Oracle over the next few days with our technical team,” Mnuchin told CNBC. during an interview early Monday.
Even if TikTok data is stored by Oracle in the United States, ByteDance can maintain some control over the program’s algorithms, the computer code behind the service, to choose which videos will be displayed to which users. If TikTok’s algorithms remain in ByteDance’s hands, they risk manipulating Beijing.
“The CCP has huge leverage over this company, which means that it would be very easy for the CCP to force ByteDance to very subtly push or promote content that, for example, would be preferred for a single presidential candidate,” Ryan said.
Eventually, Zhang returned, proposing an operation similar to the one he had originally proposed to consider American control. ByteDance was ready to set up a global headquarters for TikTok with a separate board, although it always wanted to retain ownership.
Perhaps in the end, the Chinese businessman decided that he could live with the terrible consequences of the ban. Trump may be able to close TikTok in the United States, but Zhang will retain full ownership elsewhere – and may return to the country in the future if the political environment changes.
Trump may be able to understand.
“It was said that I believe in the power of positive thinking. In fact, I believe in the power of negative thinking, “the president wrote in his book. “If you plan worse – if you can live with the worst – good will always take care of itself.”
(Update with Trump’s comments on decision time)
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