TikTok finally sends a proposal to the U.S. government—with a twist

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Microsoft had long been considered the frontrunner in the race for TikTok’s U.S. operations.

But it’s Oracle that has won the bidding, per a Wall Street Journal report from over the weekend, with Microsoft acknowledging that TikTok’s parent company ByteDance had turned down a potential proposal. It’s a winning moment for ByteDance investors Sequoia Capital and General Atlantic, who have sat on Oracle’s side as Walmart has sat in Microsoft’s corner.

What’s particularly interesting about the deal: It doesn’t appear to be structured like an outright sale, as the U.S. government has pushed for. On Monday, U.S. Treasury Secretary Steve Mnuchin confirmed on CNBC that the administration received a TikTok-Oracle proposal over the weekend with Oracle acting “as the trusted technology partner” that would make “representations for national security issues” presumably on behalf of TikTok. 

He added that it came with a commitment to make TikTok a “U.S.-headquartered company” with a commitment to create 20,000 new jobs.

Will this twist satisfy U.S. officials? The Journal reports that the participants believe the proposal “satisfies the concerns around data security” behind the U.S. government’s ultimatum to sell TikTok. But there may not be a significant sale of assets, and it is still unclear if TikTok’s core algorithm, which recommends content to users and is considered the company’s crowning jewel, will be part of the deal. (The Chinese government in particular has made this part of negotiations trickier by issuing export restrictions on this kind of A.I.)

We are light on details and, in TikTok’s case, time. Mnuchin says the administration is expected to review the proposal at the CFIUS committee this week before offering a recommendation to the president.

A FRAUD-PREVENTION STARTUP FACES A FRAUD INVESTIGATION: NS8, a Las Vegas-based startup that flags suspicious orders for fraud, has laid off hundreds of employees as the Securities and Exchange Commission investigates the startup for alleged fraud, per reports. That comes after the startup announced $123 million of Series A funding led by Lightspeed Venture Partners and AXA Partners in June. In a LinkedIn message to Forbes, NS8’s former CEO Adam Rogas, who left last week, said the investigation began in November.

And this brings me back to Nikola’s decision to go public via SPAC: Despite the financing method’s raging popularity in 2020, SPACs are still trying to shed their historical association with fraud. And while proponents emphasize the limited risk of investing in a SPAC before it finds an acquisition target (with funds going typically into, say, U.S. treasuries), it remains to be seen what comes after.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com


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