Exclusive-TikTok nears deal with Oracle to store its data-sources

By Echo Wang and David Shepardson

(Reuters) – TikTok is nearing a deal for Oracle Corp to store its U.S. users’ information without its Chinese parent ByteDance having access to it, hoping to address concerns of a U.S. national security panel over data integrity on the popular short video app, people familiar with the matter said.

The agreement would come a year and a half after the Committee on Foreign Investment in the United States (CFIUS) ordered ByteDance to divest TikTok because of fears that U.S. user data could be passed on to China’s communist government.

That order was not enforced after Joe Biden succeeded Donald Trump as U.S. President last year, but CFIUS has continued to harbor concerns over data security at TikTok that ByteDance is now hoping to address, the sources said.

It is not clear whether CFIUS will find that TikTok’s partnership with Oracle will resolve the national security issues it has identified, the sources said. A spokesperson for the U.S. Department of the Treasury, which chairs CFIUS, did not immediately respond to a request for comment.

Oracle had discussed acquiring a minority stake in TikTok in 2020, when ByteDance was under U.S. pressure to sell the app. The cloud computing giant will store all of TikTok’s U.S. user data on Oracle data servers under the new proposed partnership, the sources said. Some of TikTok’s data is currently stored on Alphabet Inc’s Google Cloud.

A dedicated U.S. data management team acting as a gatekeeper for U.S. user information and ringfencing it from ByteDance will be set up under the agreement, the sources said. The companies are discussing a structure under which that team would not be under TikTok’s control or supervision, the sources added.

TikTok is also exploring partnerships with other technology companies over firewalls and cyber security measures, the sources added.

ByteDance and Oracle did not immediately respond to requests for comment.

TikTok is one of the world’s most popular social media apps, with more than 1 billion active users globally. The information of U.S. users is currently stored in TikTok data centers in Virginia, with a back-up in Singapore.

The United States has been increasingly scrutinizing app developers over the personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

Chinese gaming company Beijing Kunlun Tech Co Ltd was forced to sell its popular gay dating app Grindr in 2020 after CFIUS approached it with national security concerns.

ByteDance is one of China’s fastest growing startups. It owns the country’s leading news aggregator, Jinri Toutiao, as well as TikTok’s Chinese counterpart Douyin.

(Reporting by Echo Wang in New York and David Sheparson in Washington D.C.; Editing by Greg Roumeliotis)