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TikTok, owned by China’s ByteDance (BDNCE), is facing an existential crisis as it tries to close a key security deal with the U.S. government and remain under Chinese control, forcing it to reportedly allow for additional scrutiny of its business.
The social network, which has more than 1B users worldwide, has worked to expand Oracle’s (NYSE:ORCL) role to keep its infrastructure separate from the rest of ByteDance (BDNCE), Reuters reported. Austin, Texas-based Oracle (ORCL) will review app codes, which creates the look and feel of the app, as well as server codes, the news outlet added, citing sources familiar with the matter.
Oracle (ORCL) engineers will perform reviews at “transparency centers,” with the first visit slated to occur in January in Maryland.
In June, TikTok said it would route all of its U.S. traffic through Oracle’s (ORCL) cloud technology infrastructure to better secure the information of its U.S.-based users.
In addition, TikTok also suggested the creation of a “proxy” board that would run its security division, known as the USDS, independently from ByteDance, the sources added. The board would have three members who would be hand selected by the Committee on Foreign Investment in the United States. ByteDance would not have control over the board, but would pay for the operations
The USDS, TikTok’s primary security team, is currently reporting to TikTok CEO Shou Zi Chew. The company continues to hire for the division, having recently posted several job openings in the U.S.
In addition, TikTok has also looked into hiring independent auditors who would report to CFIUS, Reuters added.
TikTok did not immediately respond to a request for comment from Seeking Alpha.
Earlier this month, it was reported that TikTok was having trouble distancing itself from its parent company, as ByteDance is still heavily reliant on Chinese workers for some key functions, including messaging, live-streaming and marketplace.
The U.S. Senate passed a bill to ban TikTok on government devices. Additionally, 12 states, including Georgia, Texas, Maryland and Iowa have already passed legislation that restricts the usage of TikTok on devices controlled or issued by their respective state governments.
The U.S. military previously banned TikTok from its government issued devices.
Fresh concerns from the Biden Administration recently popped up over TikTok and how it handles data security, leading to a delay in the aforementioned deal. The concerns included how TikTok would share information with the algorithm that figures out what videos to show its users, as well as the level of trust lawmakers would place in the company.
Former President Trump nearly forced a sale of TikTok in 2020 over national security concerns on worries that data could be sent to China’s Communist Party.
However, in 2021, President Biden revoked an executive order from Trump that would have banned TikTok in the U.S.
Last month, TikTok turned on its e-commerce engine in the U.S. as it looks to diversify its revenue.
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