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ByteDance says the algorithm will not be transmitted to Oracle

The logos of the Chinese video portal TikTok and the US software and hardware manufacturer Oracle Corporation can be seen on a smartphone and screen in Berlin on September 14, 2020.

Thomas Trutschel | Photo library | Getty Images

GUANGZHOU, China – ByteDance will not transfer algorithms and technologies to Oracle as part of a contract announced over the weekend to maintain the operation of the TikTok social media app in the US

President Donald Trump said he approved a deal on Saturday to create a US-based company called TikTok Global, with Oracle and Walmart taking minority stakes. Oracle becomes TikTok̵

7;s secure cloud provider and hosts US user data.

However, according to a statement by ByteDance on Monday, the deal does not include a transfer of algorithms and technologies. The company said Oracle could check the source code instead.

“The current plan does not include the transfer of algorithms and technologies. Oracle has the authority to review the source code of TikTok USA,” said a statement by ByteDance, according to a CNBC translation.

The source code forms the basis for applications and software. Allowing inspections of the source code is common practice to address concerns about local data security.

TikTok’s recommendation algorithm has been a key driver of growth and has helped suggest other videos to users and embed them into the app.

ByteDance also confirmed that it would run a small round of funding prior to going public (initial public offering). This makes TikTok Global an 80% subsidiary of ByteDance, which controls the majority. As part of the Oracle and Walmart deal, the companies said they would work towards a US listing within a year.

Over the weekend, Trump said the new TikTok Global will “have nothing to do with a foreign country, no foreign country, it will have nothing to do with China. It will be perfectly safe. That will be part of the business.” “”

ByteDance’s majority stake in Beijing-based TikTok appears to contradict this. However, ByteDance is 40% owned by US venture capital firms, so the Trump administration can technically claim that TikTok Global is now majority owned by US funds.

Last month, as the TikTok deal appeared to be finalizing, China threw a wrench into the job by updating its list of technologies that are subject to export restrictions. One of the technologies on the list was related to recommendation algorithms. After Beijing took this step, ByteDance said it would comply with the rules.

Washington claimed that TikTok poses a national security threat as it collects American user data that Beijing could access. TikTok has repeatedly denied this, saying it stores Americans’ data in the US with a backup in Singapore.

In August, Trump issued an executive order that would have banned transactions with ByteDance and effectively closed TikTok in the US. This should come into force on September 20th. However, the Commerce Department said in a statement that it delayed that for a week.

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