ByteDance and Microsoft deal for TikTok to stay in U.S.

ByteDance dropped Sunday’s selling of TikTok in the U.S. following a deal with Oracle Corp that it hopes would spare it a ban in the U.S.

while appeasing the government of China, Reuters told people are familiar with the issue.

The Beijing-based company had been talking to either Oracle or a group led by Microsoft Corp to divest TikTok’s U.S. business after U.S. President Donald Trump ordered the sale last month and threatened to close the successful U.S. short-video app.

Though TikTok is best known for its aerodynamic videos of people dancing among teenagers that go viral, U.S. officials have expressed fears that information of users could be passed on to the communist government of China.

The sale talks were brought to a halt by China changing its export control rules late last month, which gave it a say on selling the TikTok algorithm to a foreign buyer.

Last week Reuters claimed that the government of China would rather shut down TikTok in the United States than letting it be part of a forced sale.

It is uncertain if the proposed agreement would be accepted by Trump, who wants a U.S. technology firm to own much of TikTok in the United States.

The Committee Foreign Investment in the United States (CFIUS) is monitoring the talks between ByteDance and Oracle, which review deals on possible national security risks.

ByteDance plans to claim that CFIUS’s approval of China Oceanwide Holdings Group’s acquisition of U.S. insurer Genworth Financial two years ago provides a precedent for the structure of the deal it is proposing with Oracle, the sources said.

In that contract, China Oceanwide decided to use a U.S.-based, third-party service provider to handle data from U.S. policyholders in Genworth. ByteDance would argue that a similar arrangement might safeguard data from U.S. users of TikTok, the sources said.

ByteDance and Oracle did not do so straight away. The White House did not comment. The chairman of Oracle Larry Ellison is one of Trump’s few allies in the technology community.

Microsoft said it was told by ByteDance earlier on Sunday that it would not sell the TikTok operations in the U.S.