(Bloomberg) – Zhang Yiming, founder of Tickcock-parent company ByteDance Ltd, is showing Donald Trump that he also knows a little bit about dealing.
In its proposal to partner with Oracle Corp to address US security concerns about the hit video app, the Chinese entrepreneur is offering Trump something the president has already declared unacceptable. Now the question is whether Trump rejects the proposal, gets it, or is most likely the man behind the ‘art of the deal’, opening up talks for a compromise.
The president has said that TikTok should be sold to an American owner – or discontinued. Instead what Zhang has proposed is a partnership with Oracle that will allow ByteDance to retain most of the ownership of the business, while the American software giant becomes a “trusted technology provider” to protect user data. Trump said a decision would come “soon” on Tuesday, and a security panel met to review the proposal.
The final details are in flux, but venture investors from ByteDance can take an equity stake in the Tickcock business. According to a person familiar with the discussions, it is possible that Chinese parents will try to have full ownership of the unit.
Chinese hawkers soon declared the offer dead on arrival. Senator Josh Hawley, a Republican from Missouri, has written to the US Treasury Secretary, saying the administration should “immediately reject” the partnership and work toward a “more acceptable solution” to Chinese parents.
Zhang’s initial gambit may only be to buy himself more time as he tries to avoid the conflict of the world’s two superpowers. He is starting with a stern stance so that the conversation can open and the Tiktok closes immediately. This is a lesson that could have been taken directly from Trump’s memoir in his days in real estate.
“The worst thing you could possibly do in a deal is desperate to make it,” the president wrote in his best-selling autobiography with Tony Schwartz. “This makes the other man smell of blood, and then you die.”
Zhang is likely to resonate with Trump. Treasury Secretary Steven Menuchin said Monday’s BiteDance proposal would create 20,000 jobs and bring America’s headquarters to “Tickcock Global,” presumably to operate the entire international operation of the video app. Trump has brought a cornerstone of his campaign to the country as he heads towards the November presidential election.
Zhang has also aligned himself with Oracle co-founder Larry Ellison, a staunch supporter of the president who lives up to his confidence. That alliance could persuade Trump to accept an agreement not to take over from Oracle another company.
Trump called Ellison a “tremendous guy” in August and praised him again on Tuesday.
“I have a high regard for Larry Ellison,” the president said. “He’s someone I know, he’s really a terrible guy for a long time.”
Oracle’s proposal lacks a payout to the US government that the president insisted on the terms of any deal, according to two people familiar with the plan.
Trump has made Tickcock a central example of his campaign to be tough on China. He signed an executive order that bans the app in the US on September 20, and, moreover, ordered that ByteDance be released by mid-November under an order from the Committee on Foreign Investment in the US for the video app’s US Must sell property, or CFIUS.
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At the end of the last week of August, Zhang leaned toward an offer from Microsoft Corp, where he worked for a while. An agreement was reached for the complete purchase of Tiktok US 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, in which the app was used. Beijing insisted that its regulators should also approve the sale of any property by ByteDance.
This move by China was seen as an attempt to give more benefits to Zhang. He could not give the Trump administration too far or Beijing would not sign.
Instead, Zhang turned to Ellison and Oracle. Best known for its corporate software, Redwood City, California. Based is the company’s cloud computing business that can be used to host video and strong technical capabilities to secure user data. Alison is also known for her fierce combat. When Hewlett Packard fired her CEO for an alleged inappropriate relationship, Ellison called it publicly – “the worst personnel decision since the idiots at Apple’s board fired Steve Jobs.”
The work that Zhang and Allison did is nothing like the deal that the Trump administration anticipated. Instead of buying the business outright, Oracle would invest in a newly restructured Tittock, people familiar with the proposal said. At least two shareholders in TikTok’s Chinese parent company, General Atlantic and Sequoia Capital, will place bets in the new business, one of the people said, all of whom asked not to be identified as the terms were not finalized. is.
“Based on the information we have about the Oracle deal, I cannot say that I am very confident,” analyst Fergus Ryan of the Australian Strategic Policy Institute told Bloomberg Television. “Bytes is essentially under the thumb of the Chinese Communist Party.”
Yet Mnuchin introduced it as sound that the proposal deserves serious consideration.
“We need to make sure the code is, one, safe, the data of Americans is safe, the phones are safe, and we will consult with Oracle over the next few days with our technical team.” During an interview in early Monday.
Even though Ticketok’s data is stored by Oracle in the US, ByteDance may have some control over the app’s algorithm, which uses computer code to select and select service users. If Ticketock’s algorithms remain in the hands of ByteDance, they risk being manipulated by Beijing.
“CCP has a huge advantage over this company and means that it will be very easy for CCP to provoke ByteDance very subtly or to promote content that would be preferred for a presidential candidate, e.g. For, “Ryan said.
Finally, Zhang proposes a transaction back to what he originally offered to address the US investigation. Bytdance was set to establish a global headquarters for Tiktok with a separate board, although it always wanted to retain its ownership.
Perhaps in the end, the Chinese entrepreneur decided that he could live with the terrible consequences of the ban. Trump may be able to shut down Tiktok in the US, but Zhang will retain full ownership elsewhere – and likely return to the country in the future if the political climate changes.
This is a mindset Trump may be able to understand.
“It has been 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 for the worst – if you can live with the worst – then good will always take care of itself.”
(Updated with Trump’s comments at the time of the decision)
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