Oracle’s TikTok deal pours Trump toxin into capitalism | HT Tech

Oracle’s TikTok deal pours Trump toxin into capitalism

Rewarding your friends in business is the hallmark of countries like Russia, not America.

| Updated on: Sep 17 2020, 01:00 IST

Two companies, one American and one Chinese, make a deal. The deal is contingent on U.S. government approval. It is difficult to see the U.S. company's justification for doing the deal — it sells boring-but-necessary software to businesses while the Chinese company is a quirky social media phenomenon beloved by teenagers.

Except for one thing: the top two leaders of the American company — which of course is Oracle Corp. — are staunch supporters of President Donald Trump. Oracle founder Larry Ellison threw a fund-raiser for Trump, and Chief Executive Officer Safra Catz has donated more than $130,000 on his reelection bid. Minus that relationship, it is a near certainty that Trump would reject its deal with the Chinese company, ByteDance Ltd., which created TikTok. Because of that relationship, it is a near certainty that he will approve it.

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I can scarcely imagine a situation that is a greater violation of American capitalism. The idea that a country's leader  decides which deals get done and which don't — and that it's contingent on how friendly the company is with the leader — is how it works in, say, Putin's Russia. One of great strengths of American-style capitalism is that companies succeed or fail on the merits — and that government's role is mostly that of impartial referee. Trump has repeatedly trampled over the norms of American governance and weakened the rule of law. If he approves the Oracle-TikTok deal, which seems likely, he will be continuing his degradation of American business practices as well.

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And yet — and this is the part I find astounding — nobody even blinks. “Oracle's courting of Trump may help it land TikTok's business and coveted user data,” read the headline in the Washington Post the other day, as if this were the most normal thing in the world. According to the Wall Street Journal, several ByteDance investors in Silicon Valley “went in search of a tech company with close ties to the administration”— knowing that a company that Trump favored had perhaps the only chance of succeeding. Again, this was reported as if it were unremarkable.

At this point, nobody expects the Republicans in Congress to object seriously to anything Trump does, no matter how awful, although a group of GOP senators sent a letter to the administration on Wednesday expressing their concerns. But even Democrats have raised few objections to the Oracle deal. Experts on authoritarian regimes often talk about how people gradually become accustomed to government practices that should, by all rights, horrify them. The reaction to the Oracle-TikTok deal would suggest that is happening here.

Even before Oracle entered the arena, Trump's moves against TikTok were — or should have been — unacceptable. In July, Trump first suggested a TikTok ban as a way of punishing China for what he called its role in spreading the coronavirus. A few weeks later, when he issued an executive order calling for the popular app to be banned by Sept. 15, his rationale was national security: TikTok “threatens to allow the Chinese Communist Party access to Americans' personal and proprietary information,” which, he claimed, might give China the ability to blackmail federal employees.

Even if this were true — and there are many doubters — a ban was hardly an appropriate response from an American president. As Wired put it, “Outlawing TikTok would … mean the U.S. would be participating in the same Chinese-style internet-sovereignty tactics it has long criticized.”

As companies circled TikTok, hoping to keep it alive in the U.S. by buying it outright from ByteDance, China struck back. It issued new export control rules that outlawed the export of certain technologies that TikTok used. That's the kind of arbitrary move you expect from the Chinese. When TikTok's primary suitor, Microsoft, proposed a deal that would have satisfied the Trump administration's concerns — it was going to buy TikTok outright, which would have given it control of its algorithms — ByteDance turned it down. It didn't have much choice.

Oracle, of course, is not buying TikTok. It will not take control of its algorithms. Its label is going to be TikTok's “trusted technology partner.” The deal has been submitted to the Treasury Department for review, with both companies saying that it will “resolve the administration's security concerns,” as TikTok said in a statement. But who knows?

The bet Oracle and TikTok are making — and a very cynical wager at that — is that Ellison and Catz's long-standing support of Trump will cause the president to forget about his supposed national security concerns and allow TikTok to continue operating in the U.S. pretty much the same as it had before this whole dust-up began. It seems pretty likely that is what will happen. “I have a high respect for Larry Ellison,” Trump told reporters on Tuesday. “He's really a terrific guy.”

With Trump, that's pretty much all you need to know.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast 'The Shrink Next Door.'

Written by Joe Nocera.

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First Published Date: 17 Sep, 01:00 IST