• Evan Ryan

Tik Tok, Oracle and Walmart

Seconds and Cents Episode 31. We're going to talk today Tik Tok Oracle. We've talked about Tik Tok a lot on this podcast considering that we're only 31 episodes in I think they've occupied content, like four or five of them. I don't even have the app. And I talked about Tik Tok what feels like an awful lot Tik tok, Oracle, and Walmart, the President, quote, unquote, gave his blessing to the CEO, the executive team, co CEOs, the executive team over at Oracle to do this deal with Tik tok, which would make Tik Tok not be banned. We're going to talk about whether or not it matters. I don't like the deal, we're going to talk about why don't like the deal. My hope for the listeners is not that you necessarily adopt my point of view here, but that you're able to kind of think a little bit deeper about about what this means about the role of social media about the role of government and business, right, and the role of government in global politics. Because this game, while it started out, was the kind of the app and the banning of the app started out as what I thought was a national security issue, which was a national security issue. I think if you talk to any serious cyber-security kind of individual any serious geopolitical Information Technology individual those said, the security of tech talk is of the utmost priority, especially as it continues to grow like absolute wildfire.

And now it seems like it has become an issue of kind of, not necessarily partisanship. But I think political showmanship, I am not thrilled about this deal. I am not thrilled about the way that this is going down. I don't like that This is going down in the completely public forum where you have Satya Nadella over at Microsoft just calling up the president and then Microsoft issuing a press release saying after a great discussion with the President. Like that's not necessary, I just don't think that this is a great way for, for the government to be interacting with business. And so we're gonna dive into it, we're gonna dive into like, kind of what is the situation here with tik tok, Oracle and Walmart? Why do I think it didn't solve the problem? But what do I like about this? What do I think is the silver lining about this whole situation? So what's happening first and foremost, what was released this weekend, this weekend, what was released was that Tik tok, which is owned by Chinese conglomerate called bite dance, is going to create a new company, I believe called Tik Tok USA or Tik Tok us, that new company is going to have the data be hosted by Oracle. So all the data for all the United States users, at least I know that the United States users might be other user bases in their New Zealand, I think was being thrown around as a possible user base, the European Union might be

let's talk about the United States. And the United States user base here because this is a an issue purely related to the Department of State and President Trump, the United States is going to have Oracle all of our data is going to be hosted by Oracle, which means that

in theory, again, this is in theory, right? The Chinese government will not have access to all the raw data for all the millions upon millions upon millions of users based in the United States. And so Oracle gets that deal, Walmart is going to buy Oracle gets 12 and a half percent of this new company, Walmart is going to get 7.5% of this new company, totaling 20% of this new company, 20% total ownership. And so Walmart and Oracle going into this deal together, basically, what's this going to be? I think there are a lot of venture capital firms that are going to make a bunch of money on this deal.

This is what's referred to as a shareholder dilution, which means that while the value of the business got larger, so while Tik Tok is going to be valued at a larger valuation, each kind of investors ownership stake is going to go down. But at the end of the day, that investor is going to be making more money today than they were yesterday. So Oracle is going to get this large cloud deal contract Oracle Cloud, they've been pushing this kind of division of their business for a while Oracle historically, as an enterprise database company, why consumer would ever need a database is the reason why no consumers still have databases, outside of like Excel. And Oracle has been looking to compete with Amazon Web Services, AWS with Google Cloud with Microsoft Azure with those big players. And this is going to be a really great deal for them. They're going to be able to leverage this into a lot of other cloud deals for a lot of other fortune 500 fortune 1000 startups whatever it's going to be right where now they have kind of a huge marquee client, another huge marquee client and tik tok and they have an ownership stake in tech talking. You know, Oracle wasn't really making the news before all this started and now all of a sudden Oracle's making the news

So I think this is a good deal for Oracle, I think Oracle actually got a got a really good end of the deal. What's Walmart get out of this, I think Walmart's gonna get a great deal as well, and that they're getting the data for a customer demographic that they do not have. So, when I think about Walmart, I think about kind of young people, to be honest, not shopping there. I think they're all on Amazon. I think they're all on Pinterest. I think they're all on Etsy. I think they're using Facebook marketplace. And I don't necessarily think that they're shopping online at Walmart, I just, I just don't see that. I think there are a lot of kind of teenagers and 20 somethings all the way up to 29 3031 that are using their parents, Amazon Prime accounts, and Walmart really wants to compete against Amazon, in the e commerce space. And so far, the last five years they've been doing, they've been really successful at it. And so I think that Walmart getting all this user data is going to be really good for Walmart, I also think Walmart's gonna make a ton of money on this deal, because I think Tik Tok is going to make a ton of money when they IPO. And so that's just kind of it what's happening. is going to sell 20% of the company, they're going to to Oracle into Walmart, Walmart is going to get the customer going to get access to customer data, Oracle is going to host the customer data, in theory, the Chinese government is going to have access to that customer data, and also that user data, and that's just going to be it. Now I don't love this. I'm in kind of my in a little bit here. I'm going to get into why I don't love this. Do I think that it's good for Oracle and Walmart? Yeah, I do. Do I think it's great for the venture capitalists that invested in bytedance, like, five years ago, six, seven years ago. I think this is brilliant for the venture capitalist, because I think they're just gonna make a boatload of money. But before we go into why I don't like this, we have to go into kind of what happens so earlier in the summer, President Trump signed an executive order that said, Hey, if a United States company does not buy tik tok, or does not buy a division of tik tok, where all the data and all the algorithms and everything can be stored inside of the United States, and are not subject to Chinese law, then I'm going to ban the app and the app is going to be banned on September either 15 or 17, or 20. But in the middle of September, the app is going to be banned. And at the time, the issue here was that there was a a news report that had come out a couple of months earlier that said, that Tik Tok was uploading all of the kind of all of the text that you had on your clipboard. So when you copy on your phone, it copies to what's called a clipboard and whether or not you allowed Tik Tok to upload that data, it was uploading that data. I have built mobile apps before I know exactly how easy it is to upload to upload information from the clipboard. I've done it before. I didn't, we never did it in a production release. So we never did it to actual users. But at the time, we were exploring features and just kind of built out this feature in a matter of an hour or two, literally an hour or two. And it turns out, it was really easy to upload the content from the clipboard up to up to a database up to servers up to do whatever you wanted to do. And an iOS 14, which was just released. I don't know about Android, but an iOS 14, which was just released to iPhone users here a couple days ago. They now give you a notification, which says that something was copied or pasted from the clipboard or that the clipboard was being activated, which I think is a really, really good update. I can't believe Apple didn't do that earlier. But basically, what was happening here is we had 10s of millions of tik tok users having their data uploaded to China and having the Chinese government being able to access that data and change minds of the American people using using that data and using their algorithms. And that is the problem. That was the chief issue here that I think went overlooked. I know Ben Thompson over its trajectory, thought that it went overlooked, which was that the real problem isn't the user data. I mean, Facebook has user grade Instagram as user data, Twitter as user data. Pinterest has user data. Google has user data, Apple has user data, everybody has user data. If you're a big player in tech, you have user data. Uber has user data. Uber has a ton of data, they know where you're going, right? Like there are all of these sorts of there all of these sorts of companies that just have a ton, a ton, a ton of data. And not only do they have a ton of data on you, but they have a ton of data and everybody else who's just like you. And so even if they might have a missing data point from you, they're gonna get 9899 99.9% accurate guesses on whatever that missing data point is on you because they know so many other people that are exactly like you.

So the app the issue here is that the Tik Tok algorithm was being actively used to censor content. It was being actively used. I mean, there are numerous cases if you had to Google