TikTok, the most downloaded and controversial app of 2020, has dodged a bullet. Given the Chinese technology app’s extreme popularity and subsequently the wealth of data collected, it posed a threat to U.S. security since the Chinese government could force the company to hand over its data at any time. President Trump threatened to block the social media app in America on September 15 unless another U.S. company, such as Microsoft, purchased it.
While Microsoft did in-fact submit a proposal to purchase the rights to the platform, it was turned down and President Trump later tentatively approved a joint-deal submitted by Oracle, a U.S. computer tech firm, and Walmart. They proposed “TikTok Global,” a $12 billion deal, in an effort to move customer data to U.S. grounds. The approved deal would allow a 20% ownership of the platform, which in turn, would allow more business for American companies and investors. To many, the joint deal came as a surprise, with a computer tech firm and retail giant being an odd pairing. However, it makes sense for the two companies. Utilizing Oracle will be beneficial since it can provide cloud services that houses U.S. data and cannot be accessed by the Chinese government which will diminish the posed threat to U.S. security. This deal also allows Walmart to get one step ahead of competitor Amazon, since it allows them to enter the social media space. In addition, the joint effort will support not only Oracle’s growth in evolving the video communications space, but also Walmart’s attempt to reach and benefit from a large and younger audience that they were unable to target as effectively before.
However, there is some speculation if the 20% stake in the company will actually be effective, with representatives coming from both political parties arguing that in order for U.S. security to remain intact, full ownership must be attained. This goes against President Trump’s claim that “security will be 100 percent”, adding that new data would be stored and operated from a separate cloud of that used from its original Chinese parent company. While ByteDance would continue to own 80% of TikTok, Oracle released a statement stating that the U.S. would be the majority owners once plan approval, and ByteDance would have stake in the new company once brought to U.S. grounds.
TikTok users have been hastily waiting to receive an answer on whether their favorite app would be banned or not, so “TikTok Global” could not have been proposed at a better time. With the app still running, the deal will likely not change the apps functions, and users will be able to continue to create their beloved videos. The tentative approval of the joint deal does, however, have some interesting ties connected to it. In an attempt to raise awareness to the U.S. education system, Donald Trump is requesting funding for a $5 billion venture to “educate people as to [the] real history of our country—the real history, not the fake history.” Under the deal, Oracle has agreed to help with the education initiative by assisting in creating an education system that would involve an “AI-driven online curriculum to teach children from inner cities to suburbs.” While the curriculum has not been fully developed, Oracle says users can expect the new system to encompass multiple subjects, including history, while partner, Walmart has yet to comment about the education initiative.
For advertisers utilizing the popular app, this potential deal has some serious implications. Currently, TikTok is revered as a trendy app unlike any other due to its extremely smart algorithm and its ability to target its users with content and ads that it thinks are most relevant to them. However, the purchase of the platform does not guarantee instant success as ByteDance will not be selling or transferring its algorithm in any deal. If the deal goes through, the U.S. team can attempt to replicate the algorithm, however, newly implemented algorithms require ample time to study each user and what is most likely to interest them. With competition heating up with other apps such as Instagram’s “Reels,” it may be hard to catch up and target audiences that were once easily targetable within the app. In addition to having to create a new algorithm, the adoption of the platform by Walmart may also sway users’ perception of the extremely trendy and “cool” app. Since TikTok is known to be quite controversial, the adoption of the platform by such a mainstream company could potentially change the nature and tone of the app. Since the app is mostly used by a younger audience, users may lose interest in the platform given the new adaptation by Walmart since the retail company is not necessarily known to be synonymous with being “trendy” or “cool.” With this, users may look to other apps to spend their time on that reflect the same values and interests of the user.
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