A potential agreement between TikTok and Oracle would bar the social platform’s Chinese parent company ByteDance from accessing US consumer data. The move promises greater data privacy and may also bolster the social platform’s advertising brawn. Here’s what you need to know.
TikTok and Oracle are in talks to ink a deal that would see the social platform’s US user data stored exclusively with the enterprise IT giant. The agreement would bar TikTok’s Chinese parent company ByteDance from accessing US user data altogether.
The move would speak to US consumers’ growing demand for privacy and add to a wave of increasingly stringent privacy regulations and privacy-focused tech policies. A spokesperson for the company tells The Drum: "TikTok is committed to protecting the privacy and security of our community. User data is stored in data centers in the US and Singapore, and we continue to invest in data security as part of our overall work to keep our users and their information safe."
However, the agreement may also give TikTok an upper hand when it comes to targeted advertising by granting the video-sharing platform access to Oracle’s troves of consumer data.
The details of the deal
The deal — which, per reports by BuzzFeed News, is known within TikTok as ‘Project Texas’, a nod to Oracle’s headquarters in Austin — would entail housing all of TikTok’s US user data exclusively with Oracle. ByteDance would be prohibited from accessing it. A designated independent team of cybersecurity professionals and engineers would be assembled to protect the data, according to reporting by Reuters.
The deal may stem from concerns about the threat of ByteDance overstepping consumer data privacy standards. In August of 2020, US President Donald Trump ordered ByteDance to divest interest in the US operations of TikTok (which in China is known as Douyin). Trump and other US officials aired concerns about the company sharing US user data with the Chinese government and suggested that the order was issued due to national security concerns. “There is credible evidence that leads me to believe that ByteDance... might take action that threatens to impair the national security of the United States,” the President said in the order.
Though ByteDance was given a strict timeline by which they had to sell the US version of TikTok, a deal never came to fruition, because the order was not enforced when President Biden took office in early 2021. The Beijing-based company had previously made plans to sell TikTok’s US operations to a group that included both Oracle and Walmart.
Now, talks of that deal — or at least some version of that deal — are happening once more.
Some experts, however, don’t think a TikTok/Oracle deal will mitigate the platform’s inherent privacy risks. Tom Kelly, chief executive officer at data breach response and privacy firm IDX, says, “TikTok represents a data privacy risk, and a deal with Oracle to host data for US users doesn’t change that. Using a US-based cloud provider to host and protect the data of US users… isn’t a sufficient protection from privacy abuses by the Chinese parent company or the Chinese government. What’s more, there’s no evidence that even what privacy protections do exist under the GDPR or US privacy laws will be respected by a Chinese company or the Chinese government.”
And beyond concerns about user data abuse at the hands of ByteDance or the Chinese government, Kelly argues that TikTok’s architecture inherently lacks privacy protections of the kind that consumers and policymakers in the US are demanding. “As long as the data is still being collected, aggregated and potentially sold or used for targeted advising, users’ privacy is being violated,” he says. “And TikTok has given no indication that it is fundamentally changing its expansive and intrusive data collection practices.”
The potential benefits for TikTok
If Oracle becomes TikTok’s partner for US consumer data management, it’s not just consumers and privacy and national security players who stand to benefit.
The move might help the social platform gain a leg-up on its competitors when it comes to advertising, says Emad Hasan, the chief executive officer of software firm Retina AI and former head of data analytics at Facebook. “It seems like it's more of a commercial deal [at this point]. However, depending on if it goes way beyond the commercial relationship and gets to the [point that] they're really trying to partner and make the actual product better, that's where there are deeper implications.”
If the deal goes beyond data storage and is formulated as a truly two-way partnership, TikTok could gain access to Oracle’s consumer panel data. Combining its own first- and zero-party data with Oracle’s consumer data could have a potentially momentous impact, as the social platform would, in Hasan’s terms, “give them this kind of audience targeting power that only Facebook had in its heyday.”
The move also could benefit advertisers on the platform. “For brands, this deal [could ensure] that they will continue to be able to leverage TikTok as a marketing tool and gain from the ability to target and engage consumers in more precise ways,” says Matt Voda, the chief executive officer at OptiMine, a cross-channel ad measurement platform. “This rich targeting environment is why paid advertising in social media is so effective, but it also shows why privacy has now become an issue that brands need to contend with. For Oracle, this [could prove a] major win as their data and marketing platform businesses will be able to offer brands more scalable ways to leverage TikTok data for advertising.”
Voda points out the inherent irony in such a possibility, drawing attention to the fact that the federal push to safeguard US TikTok user data could actually end up being sold and used by more marketers. “‘Privacy’ in this case must be viewed through the eye of the beholder,” he says.
Even so, TikTok faces real privacy pressures that are already impeding its advertising capabilities — namely Apple’s privacy-centric iOS updates (chief among them being AppTrackingTransparency, which grants users greater say over which apps are given access to their data). With these and similar moves, mobile ad targeting and measurement have grown trickier than ever.
“Apple and Android… have completely deprecated how [Apple’s Identifier for Advertisers] were shared between apps, which is upending how ad measurement has been done,” says Hasan. “We've seen the impact of this on Facebook. But TikTok never had the chance to have the same advertising power as Facebook. And TikTok’s in a bit of a weird spot, because [there’s a gap between] what everybody expects TikTok to be able to do and what they actually can do because of [Apple’s iOS] changes. It’s going to be an interesting thing for TikTok to figure out how, given these privacy changes… [they are going to] build or take market share away from the Facebooks and Instagrams of the world.”
In any case, a data-storing deal with Oracle would send a message to policymakers around the world that TikTok is taking data privacy and security seriously — and taking proactive measures that regulations like the California Consumer Privacy Act and its updated version the California Privacy Rights Act may have tried to enforce in any case.
The terms of any potential deal between TikTok and Oracle remain under wraps. Oracle did not respond to a request for comment.