China should block US TikTok deal, state media says: 'A trick to take over TikTok'

China Daily called the deal 'dirty and unfair and based on bullying and extortion'

Chinese state media is encouraging the Chinese government to block the United States' proposed TikTok deal.

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President Trump has touted a potential partnership between Oracle, Walmart and TikTok that would shift the company's global headquarters to the U.S. and give Americans more control over the app's U.S. operations after the administration threatened to ban it in August, citing national security concerns.

TickerSecurityLastChangeChange %
WMTWALMART INC.142.95-1.76-1.22%
ORCLORACLE CORPORATION59.62-0.67-1.11%

"What the United States has done to TikTok is almost the same as a gangster forcing an unreasonable and unfair business deal on a legitimate company," the editorial board for China's state-run newspaper, China Daily, wrote on Wednesday.

Weifeng Zhong, a senior research fellow at the Mercatus Center at George Mason University, told FOX Business that Chinese state media is often more "hawkish" than actual Chinese policy, but China could still be "using propaganda to negotiate better terms."

The board noted that if the estimated $60 billion TikTok-Oracle-Walmart deal went through, four of the five TikTok Global board seats would be filled by Americans and one would be filled by a Chinese executive. ByteDance, TikTok's Chinese parent company, would retain control over the app's algorithms, but Oracle would have access to the app's source code and updates.

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In total, Oracle and Walmart would have a 20% stake in TikTok Global; Oracle would provide cloud services for the app's data and Walmart would provide e-commerce, fulfillment and payments, Oracle said in a Sept. 19 statement.

"TikTok Global will be majority-owned by American investors," the statement said, contradicting earlier reports that said ByteDance would retain the majority of the new headquarters. Several outlets have reported on confusion surrounding the deal and what percentages of the company U.S. and Chinese shareholders will own, respectively.

Zhong explained that both the U.S. and Chinese sides are "learning about how practical the terms are" and could be concerned about security risks when the companies combine. ByteDance could still have the power to access U.S. data through its algorithm, he said, and the Chinese are worried that Oracle could potentially access "business secrets."

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"I think the ownership share is an issue that has been blown out of proportion," he said. "We shouldn't be focused on whether a party owns 50%. We should focus on who has the final say in protecting data, privacy and national security. We need to look at the control rights in the end."

The China Daily described the deal as a U.S. "trick to finally take over TikTok," suggesting that the country is envious of TikTok's success in comparison to U.S. competitors.

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"It is not the first time the US has played such dirty tricks to bully foreign companies in order to either destroy them or take them over. China has no reason to give the green light to such a deal, which is dirty and unfair and based on bullying and extortion," the newspaper's board wrote.

Hu Xijin, the editor-in-chief of China's state-run Global Times, said "there's no way the Chinese government will accept [Trump's] demand" in a Tuesday tweet, adding that the U.S. "can ruin TikTok's U.S. business, if U.S. users do not object, but [it] can't rob it and turn it into a U.S. baby."

The Trump administration, as well as other congressional leaders and tech experts, have pointed to a 2017 Chinese national security law that says Chinese companies must comply with CCP intelligence requests as the reasoning behind their concern regarding the app.

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They say that because TikTok — like many American apps — can access user data such as location and search history, that information could be exposed to the Chinese government.

"If China decides to block the deal, the ball would come back to the court of the Trump administration," Zhong said. If the administration really thinks TikTok is a concern, they should block the app "like they blocked WeChat altogether" to demonstrate that their stance against Chinese companies is firm.

He added that the U.S. does not want to be in a situation in which it does not mitigate potential national security threats from China, but at the same time, it does not want to risk economic damage between the two countries.

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