TikTok, Biden administration reach crossroads in national security agreement

Yahoo Finance tech reporter Allie Garfinkle outlines the talks between TikTok and Biden administration officials regarding the national security concerns tied to the social media app and Oracle's willingness to chaperone any promises.

Video Transcript

DAVE BRIGGS: A national security deal between popular social media app TikTok and the Biden administration is at a standstill. The Wall Street Journal reporting that security concerns are holding up negotiations. We spoke with Senator Mark Warner recently, who has been spoken-- really speaking out about security risks he feels the app poses. Here's what he told us.

MARK WARNER: If, at the end of the day, if the Communist Party and President Xi can dial up or dial down the content that your kids may be seeing, that would worry me.

DAVE BRIGGS: It does, indeed. Yahoo Finance tech reporter Allie Garfinkle here with more on this. Allie, nice to see you. How is TikTok responding to all of this?

ALLIE GARFINKLE: Great to see you, Dave. So, from TikTok's end, what they're saying is that they're in a holding pattern right now. These concerns, the stalling, it's not the first time we've seen these talks stall. And in this case, it is for national security concerns, right? The government is worried that they can't necessarily trust TikTok to agree to the terms of the deal, if they can complete it fully. They're also worried about how the company uses data in its recommendations algorithm.

Now, for TikTok's part, right, what are they saying? They're essentially saying the government hasn't come back with new demands as to how they might go about addressing some of those security concerns. So from TikTok's end, what essentially they've said, actually, is that they're waiting for an update.

There is some stuff we do know, Dave. We do know that Oracle has stepped in to kind of agree to be TikTok's American babysitter, if you will. They've agreed to help TikTok move US user data to servers in Virginia-- not in Virginia, I'm sorry-- Oracle servers. But they are moving from data centers in Singapore and Virginia. So Oracle is kind of overseeing it. We'll see what happens. My expectation is that talks will probably begin again relatively soon.

It should be said TikTok has 1 billion users, Dave. It is ubiquitous. I had an analyst say to me earlier this week, you cannot overcover TikTok. You cannot overstate how important it is right now.

SEANA SMITH: It certainly is extremely important. Millions and millions of people are on it, like you said. FCC commissioner Brendan Carr was on our program last month, telling us that anything other than a ban would not be sufficient. What's the likelihood, do you think, of an outright ban on TikTok? Because at this point, I would argue it doesn't seem that likely.

ALLIE GARFINKLE: I would agree with you, Seana, frankly. I've talked to a lot of analysts, and I have not found a single one who has said to me that they think it is likely that TikTok will be banned. It's also worth noting President Donald Trump, back in 2020, tried to ban the app and failed. So there is precedent for there being an attempted ban and a failure. And any Wall Street analyst I can talk to thinks that there will be some kind of agreement reached eventually.

It's worth saying, though, if that were to happen, completely theoretically, you know, Meta and Snap would really stand to benefit, who are seen as-- who TikTok has kind of flagged as their base competitors, and vice versa. So I don't personally think it's likely. Most Wall Street analysts don't. But you're hearing a lot of rhetoric coming out of Washington that's pretty fiery.