Speaker 1: This is a story of TikTok showdown with President Trump.
Speaker 1: It starts on a Friday in August. For Mario Parker,
Speaker 1: it began just like any other night on the job.
Speaker 1: He's a reporter here at Bloomberg who covers the White House.
Speaker 1: The President always travels with a group of reporters. We
Speaker 1: give updates on the president's movements. That could be whether
Speaker 1: at the White House or that can be on the
Speaker 1: road that sometimes involves riding aboard Air Force one. That night,
Speaker 1: Mario was on the plane with President Trump. The journalist
Speaker 1: usually sit in the back of the plane waiting for
Speaker 1: the President to make a move. When he starts walking back,
Speaker 1: you know it. So you see, you know, some of
Speaker 1: the Secret Service agents move into different positions, and so
Speaker 1: we know, oh he's coming, he's on his way back.
Speaker 1: It's an electricity at that point because you know he's
Speaker 1: coming back. It's going to be an intimate conversation. Trump
Speaker 1: had already said he might go after TikTok earlier that
Speaker 1: summer because it was owned by a Chinese company, but
Speaker 1: he had just made a vague threat, and Mario wanted
Speaker 1: to see if the President would say something more specific. TikTok.
Speaker 1: That was like my primary if if I had a
Speaker 1: question with the president, that was like my target for
Speaker 1: that day. I asked him about it. He was kind
Speaker 1: of baffling on whether or not to announce it. No
Speaker 1: one really expected a straight answer from Trump, but the
Speaker 1: reporters that had day kept pressing him, and then the
Speaker 1: President came out and said he was going to band TikTok.
Speaker 1: He might sign something as soon as the next day.
Speaker 1: Trump said, I have that authority. I could do it
Speaker 1: with an executive order. This is something that's like concrete tomorrow,
Speaker 1: hard day. I'm going to take this hard action, which
Speaker 1: is banning, and I'm going to do it in this manner,
Speaker 1: and so there's a much more definitive, serious tone to it.
Speaker 1: This was huge news because it wasn't just a conflict
Speaker 1: between the President and TikTok. Things between the US and
Speaker 1: China had never been worse. For Trump to pick a
Speaker 1: fight with TikTok meant that he was going after China
Speaker 1: in a big way. It's about maybe a dozen journalists.
Speaker 1: I looked around just to make sure a to make
Speaker 1: sure I heard him right, because I'm wondering if everybody
Speaker 1: else is freaking out just like me because I'm already thinking, um,
Speaker 1: x amount of miles in the air. I don't have
Speaker 1: cell phone service. I need to tell my editors, like
Speaker 1: what's going on. I'm panicking a little bit inside, and
Speaker 1: I look around it. Everybody else has the same look
Speaker 1: of horror. You know, how long will it take until
Speaker 1: you know? I'm looking at my phone like when can
Speaker 1: I get a bar? When can I get a bar?
Speaker 1: When the plane landed, the news rippled like an explosion
Speaker 1: across TikTok's teenage users. So it was actually I was
Speaker 1: in my room because I believe it was like one
Speaker 1: or two in the morning here for me, and I
Speaker 1: was about to go to bed, and then I get
Speaker 1: a call from my friends and he's like, oh my gosh,
Speaker 1: did you hear what happened? And then apparently, you know,
Speaker 1: Trump said that TikTok he was going to ban TikTok tomorrow,
Speaker 1: like and it was Friday night. That's Gabby Murray. She's nineteen.
Speaker 1: She's a popular TikTok star who's spoken on previous episodes.
Speaker 1: It was kind of almost like a little panic thing,
Speaker 1: and you know, all night I was like freaking out
Speaker 1: and like I really couldn't calm down. I was super upset,
Speaker 1: and I was like, is this really the end? Teens
Speaker 1: on TikTok were spiraling and the late night TV shows
Speaker 1: were eating this up. That's right. Instead of stopping a
Speaker 1: pandemic or helping unemployed Americans, he's pretending he has the
Speaker 1: power to unilaterally ban a social media app. Apparently this
Speaker 1: is a very real national security threat, the Chinese government
Speaker 1: knowing which Americans canon can't dance? What is he doing?
Speaker 1: Is he the President of the United States or the
Speaker 1: preacher from Footloose? And things were about to get even weirder.
Speaker 1: You're listening to Foundering. I'm your host, Shelley Bancho. This
Speaker 1: is the last episode of our series about TikTok. It's
Speaker 1: the story of an improbable rise. The app captured the
Speaker 1: attention of an entire generation. It became the first social
Speaker 1: media app from China to build a global following. But
Speaker 1: TikTok became a victim of its own success. It grew
Speaker 1: to be so big that it got caught in a
Speaker 1: standoff between the US and China. And this was only
Speaker 1: the start of its problems. President Trump became so obsessed
Speaker 1: with TikTok. He threatened to kick it out of the
Speaker 1: US altogether. We asked TikTok to comment on this episode,
Speaker 1: and a spokesperson referred me to a previous statement from
Speaker 1: Vanessa Papas, the CEO of TikTok. She said, when it
Speaker 1: comes to safety and security, we're building the safest app.
Speaker 1: We're here for the long run. More on that after
Speaker 1: a quick break by Dances. CEO John gi Ming is
Speaker 1: known as a quiet guy, a workaholic who avoids the limelight.
Speaker 1: But when President Trump went after TikTok, it felt like
Speaker 1: a personal affront because you means spent his whole life
Speaker 1: striving to become a successful entrepreneur, and just when he
Speaker 1: succeeded in taking TikTok global and fulfilling his lifelong dream,
Speaker 1: the American President wanted to take it away from him.
Speaker 1: It's bizarre thinking back on it now, but for a
Speaker 1: really significant portion of Trump's attention was focused not only
Speaker 1: on coronavirus, the Democrats, or impeachment. He was zeroed in
Speaker 1: on TikTok. So, after Trump says he's going to ban TikTok,
Speaker 1: you mean, does something unexpected. He fires off a series
Speaker 1: of letters to employees and says the company is facing
Speaker 1: an existential crisis. I asked my colleague to read parts
Speaker 1: of these letters. They're translated and edited for Claire Party.
Speaker 1: These past few months have been a challenging time for
Speaker 1: us all and over the last week you've probably heard
Speaker 1: a lot of speculation about TikTok in the media. As
Speaker 1: you may know, in the current environment, we faced a
Speaker 1: real possibility of a forced sale of TikTok's US business
Speaker 1: or an executive order banning the app in the US.
Speaker 1: Sources told me that you mean new politicians were using
Speaker 1: TikTok as a punching bag, but he refused to believe
Speaker 1: that the US president whatever really shut down the app.
Speaker 1: That just seemed unthinkable. In one lettering sounds almost mournful
Speaker 1: about all the work that had been poured into TikTok. Yesterday,
Speaker 1: I worked until dawn. Before I went to bed, I
Speaker 1: opened my phone and saw someone post a photo from
Speaker 1: our office building in Shinjin. At five thirty in the morning,
Speaker 1: the lights were still one. Let's be honest, many of
Speaker 1: our Chinese colleagues have made personal sacrifices, and I'll push
Speaker 1: to become a global company. You mean living in China,
Speaker 1: but he was keeping us ours to deal with the
Speaker 1: Trump fallout. That's a twelve hour time difference. I mean
Speaker 1: was frustrated he felt unfairly singled out. I actually understand
Speaker 1: that as a Chinese company that's reached global status, people
Speaker 1: will hold us to a highest standard, but we don't
Speaker 1: have accurate information about us. He says. The US government
Speaker 1: was overreaching and its attempts to force TikTok to sell
Speaker 1: as a company, we have no choice but to abide
Speaker 1: by the law. But that's not what be out a
Speaker 1: side once. Their real goal is a full blown embargo
Speaker 1: and more. Eming acknowledges that things might seem like a disaster,
Speaker 1: but he urges employees to hold steady. We need to
Speaker 1: show the vise misunderstandings. For the time being, we hope
Speaker 1: that people will not be too concerned about the shotdown
Speaker 1: damage to our reputation. Let's be patient and do the
Speaker 1: right thing. The TikTok band caught the company by surprise.
Speaker 1: Their new CEO, Kevin Mayer, had only been on the
Speaker 1: job for two months. They hired Kevin from Disney. They
Speaker 1: hoped an American executive leading the company might get the
Speaker 1: U s government off their backs, but Trump went after
Speaker 1: them anyway. That led to another question, could an American
Speaker 1: president even ban a social media app? There was no
Speaker 1: precedent for this. I spoke with my colleague Kurt Wagner,
Speaker 1: He's a social media reporter. I remember my reaction was
Speaker 1: basically to laugh, Is this something he can he can
Speaker 1: legally do? Right? Can he just tell people they can't
Speaker 1: have this app on their phones? And if so, how
Speaker 1: would you even go about enforcing that right? But you know,
Speaker 1: as with a lot of things with the Trump administration,
Speaker 1: I think very quickly, you you learned that just because
Speaker 1: something doesn't really make sense on the surface doesn't mean
Speaker 1: that it's not being seriously pursued behind the scenes. The
Speaker 1: TikTok and seemed to be about more than the app itself.
Speaker 1: I think it became immediately clear that TikTok was being
Speaker 1: used in this broader trade war with China. You realize
Speaker 1: that it's not really about the app itself. It's about
Speaker 1: the leverage that I think Trump and his administration thought
Speaker 1: that they would have over over China. And so what
Speaker 1: was expected to happen was for President Trump to come
Speaker 1: out and say byte Dance needs to basically sell off
Speaker 1: the US version of TikTok, and so as a result,
Speaker 1: byte Dance was then in the market for a buyer
Speaker 1: of its US business, and there was one name that
Speaker 1: floated to the top as a potential buyer. Microsoft e
Speaker 1: Ming had already held a number of secret meetings with
Speaker 1: Microsoft CEO sat An Indella to talk about how they
Speaker 1: could work together. But once the Trump and Minister station
Speaker 1: turned up the heat on TikTok, those talks escalated. Microsoft
Speaker 1: put out a statement saying they were in talks to
Speaker 1: buy TikTok, and sources tell me that Donald Trump personally
Speaker 1: called Microsoft CEO to ask for specific items to be
Speaker 1: included in the press release before it went out. Yeah,
Speaker 1: companies do not announce deals before deals are done. Typically,
Speaker 1: the letter from Microsoft was very uncommon. Typically, when a
Speaker 1: company like Microsoft by by TikTok, Microsoft and TikTok are talking,
Speaker 1: you don't have the President of the United States and
Speaker 1: his administration part of the negotiation. But this was not
Speaker 1: a normal acquisition, and you did have the President as
Speaker 1: part of the negotiation. Will you read that press release
Speaker 1: that Microsoft put out. Yeah? Um, so this was from
Speaker 1: their corporate blog and it says following a conversation between
Speaker 1: Microsoft CEO Satia Adela and President Donald J. Trump, Microsoft
Speaker 1: is prepared to continue discussions to explore a purchase of
Speaker 1: TikTok in the United States. Microsoft fully appreciates the importance
Speaker 1: of addressing the President's concerns. It is committed to acquiring TikTok,
Speaker 1: subject to a complete security review and providing proper economic
Speaker 1: benefits to the United States. Microsoft appreciates the US governments
Speaker 1: and President Trump's personal involvement. What the heck is proper
Speaker 1: economic benefits to the United States. This was a very
Speaker 1: fun and bizarre wrinkle to this whole story. It was
Speaker 1: kind of learned later that President Trump was actually expecting
Speaker 1: some kind of payment in return for facilitating this arrangement. Right,
Speaker 1: So it struck a lot of people as being um,
Speaker 1: not only legally dubious, but certainly ethically dubious. Right, Like,
Speaker 1: here's the president. He's demanding that this deal get done,
Speaker 1: and then on top of that, he's demanding that some
Speaker 1: type of payment go back to this says the U. S. Treasury.
Speaker 1: There was speculation that it would even be you know,
Speaker 1: to Trump himself. When we asked Microsoft about Trump's role
Speaker 1: in the negotiations. They declined to comment. This was a
Speaker 1: sobering moment for Yeming. It looked like TikTok could be
Speaker 1: snatched away for reasons outside its control. TikTok's fate seemed
Speaker 1: to rest on the whims of President Trump. There was
Speaker 1: a lot of discussion at this time as well about
Speaker 1: this idea of maybe just using TikTok as a distraction, right,
Speaker 1: Like this was when the COVID fight was not going well.
Speaker 1: You know, the election is coming up, right, and the
Speaker 1: President was running out of money for his election efforts.
Speaker 1: So like this was something that he felt he could
Speaker 1: exert some level of control over that maybe you know,
Speaker 1: other parts of his life and life in America at
Speaker 1: that time, he didn't really have that. We'll be right back.
Speaker 1: So this is when the clock starts ticking because Trump
Speaker 1: makes good on his threats. He issues a pair of
Speaker 1: executive orders giving TikTok a forty five day deadline to
Speaker 1: find a buyer. Sources told me that Eming was reluctant
Speaker 1: to sell his business, but he was under pressure because
Speaker 1: the band was looming and his investors, who had sunk
Speaker 1: seven point five billion dollars into by Dance over the
Speaker 1: years wanted their payout before it was too late. Over
Speaker 1: in China, Eming wasn't hot water too. Because his attempts
Speaker 1: to appease the US government were really unpopular. People flooded
Speaker 1: Eming social media with messages slamming his choice to sell.
Speaker 1: They called him a U S lab doog, a trader.
Speaker 1: They accused him of kneeling Washington and betraying China. Here's
Speaker 1: former tech banker Roy Mom. They felt that Johniming was
Speaker 1: really just giving in without a fight. Um, how can
Speaker 1: you just given to the American government, you know, with
Speaker 1: with their demands just like that, right. It's because it
Speaker 1: seemed like it was overnight. It was like the executive
Speaker 1: order came out and then John was like, okay, you know,
Speaker 1: that's what it felt like. So TikTok found itself in
Speaker 1: this situation where they were criticized in China for being
Speaker 1: too American and they were criticized in America for being
Speaker 1: too Chinese. Then the Chinese government decided to step in
Speaker 1: new rules in China over the technology it exports. May
Speaker 1: mean selling TikTok in the US could need approval from Beijing.
Speaker 1: In the meantime, deal talks for TikTok's US operations have
Speaker 1: hit a bit of a snag, or maybe an entire roadblock.
Speaker 1: Until this moment, the Chinese government had mostly stayed out
Speaker 1: of Trump's fight with TikTok, but they intervened once it
Speaker 1: looked like advanced AI technology created by TikTok's Chinese parent
Speaker 1: company might end up in the US. They came out
Speaker 1: with a new law that prohibited any sort of sale
Speaker 1: of TikTok without China's approval. Sources told me this shock teaming.
Speaker 1: He didn't see it coming. TikTok was stuck between the
Speaker 1: push and pull of the two countries. They needed to
Speaker 1: move fast. Their American investors decided to take matters into
Speaker 1: their own hands. They start back channeling with Trump administration
Speaker 1: officials including Jared Kushner and Steve minu Chin to drive
Speaker 1: up the price of TikTok and to find a buyer
Speaker 1: that Trump would deem acceptable. That buyer was Oracle. Oracle
Speaker 1: is a big technology company that mostly built software products
Speaker 1: for businesses, not social media, so they seemed like a
Speaker 1: weird match for TikTok. What Oracle did have was a
Speaker 1: lot of money and very close relationships with President Trump.
Speaker 1: And if your TikTok, half the battle is bringing Trump
Speaker 1: a deal that he will approve, and so I think
Speaker 1: there was some feeling that if Oracle were to make
Speaker 1: a bid, it might be more likely to get his
Speaker 1: stamp of approval. The relationship between Oracle and Trump was
Speaker 1: pretty cozy. Oracle executives donated tens of thousands of dollars
Speaker 1: to Trump's campaigns. It's CEO served on the president's transition team,
Speaker 1: and the founder even lent Trump his own house in
Speaker 1: California for a fundraiser. Oracle made a billion dollar offer
Speaker 1: for TikTok's US business, but just when it looked like
Speaker 1: a possible solution was on the table, another bomb was dropped.
Speaker 1: The CEO of TikTok has resigned. Kevin Mayer led the
Speaker 1: company for just three months. Mayor said, quote, the political
Speaker 1: environment has sharply changed. He says he's thought about what
Speaker 1: the next phase of TikTok is going to look like,
Speaker 1: and it's not going to include him. I call TikTok,
Speaker 1: I call sources, and I'm like, what the heck is
Speaker 1: going on? And very quickly learned that he had just
Speaker 1: emailed um the company to say that he was stepping down,
Speaker 1: and this was not only shocking because he had only
Speaker 1: been there a short amount of time, But Kevin is
Speaker 1: not a low key higher, if you will, like, he
Speaker 1: was a really big deal. He was a longtime executive
Speaker 1: at Disney. He was incredibly successful there, and it was
Speaker 1: a pretty um dramatic exit. I love that you categorize
Speaker 1: it as not a low key higher because I remember
Speaker 1: that as soon as he was hired, they started talking
Speaker 1: about their American CEO who lives in Los Angeles, and
Speaker 1: you know, they really attached themselves on this all American
Speaker 1: CEO image. And in the end, you know, he only
Speaker 1: spent three months there and giving has been way way
Speaker 1: more time trying to find the perfect CEO, and then
Speaker 1: they find him and then he leaves after a hundred days.
Speaker 1: And I also remember that Kevin wasn't really a good
Speaker 1: fit with the company's corporate culture. The CEO, John Giming
Speaker 1: at by Dwans, really wanted to hire this corporate soldier,
Speaker 1: this American face, who would kind of right the ship
Speaker 1: in the US and kind of do what he's told,
Speaker 1: and that it didn't really work out that way because
Speaker 1: Kevin really wanted to have a say in all the
Speaker 1: different decisions, and later on sources told me that I
Speaker 1: mean told co workers that he regretted hiring Kevin. TikTok
Speaker 1: declined to comment on Kevin Mayer's departure. A few months
Speaker 1: after he stepped down, Kevin spoke to my colleague Emily
Speaker 1: Chang on Bloomberg TV, why did you leave and and
Speaker 1: do you have any regrets about that? I left because
Speaker 1: the job that I had, that I had signed up
Speaker 1: for and that I was I was I was doing,
Speaker 1: looked like it was not going to exist anymore, and
Speaker 1: you know, there was going to be a deal with
Speaker 1: Microsoft or Oraculture got to the Oracle, and at that
Speaker 1: time it seems like the right time for me to depart.
Speaker 1: I don't want to rehash that too much. Why do
Speaker 1: you think US politicians get wrong about TikTok Um. Look,
Speaker 1: I think they think that TikTok is Um is controlled
Speaker 1: by the Chinese government, and I just never found it
Speaker 1: to be the case. I think the team in China
Speaker 1: has done a great job of it. In Kevin's place,
Speaker 1: by Dance's CEO, John gi Ming elevates an executive named
Speaker 1: Vanessa Papa's She's run big parts of TikTok for years,
Speaker 1: and she wrote the playbook on turning social media fame
Speaker 1: into a career. But she's been passed over multiple times
Speaker 1: for the top job at TikTok. Still, Vanessa has stayed
Speaker 1: loyal to Ming. I interviewed her over the phone. I
Speaker 1: just have to ask, because it's my job. What's the latest?
Speaker 1: If you can say anything that the deal note negotiations
Speaker 1: of whether or not will be an answer by the
Speaker 1: STEM I cannot share, but understand you have to ask
Speaker 1: fair enough. Vanessa wasn't giving away much, but she did
Speaker 1: allude to a change unfolding it. TikTok eating had been
Speaker 1: cooperating with the sell off of his company, but Vanessa
Speaker 1: indicated that he could be shifting away from that mindset. No.
Speaker 1: I think we've been really strong in our statements. So
Speaker 1: you know, we have expressed that we disagree with the
Speaker 1: executive order. UM, we are pursuing a number of pass
Speaker 1: forward and we are positive in that, you know, we
Speaker 1: think we'll have a positive outcome. Heres Vanessa telling me
Speaker 1: they might have a positive outcome was revealing. It was
Speaker 1: the first hint that TikTok thought they might not have
Speaker 1: to cave to Trump's demands. After all, TikTok was gearing
Speaker 1: up for a fight. After months of being kicked around
Speaker 1: by the White House, the company starts running television ad
Speaker 1: to say so easy to make, almost as if they
Speaker 1: were taunting the President, using the ban as a marketing ploy. Today,
Speaker 1: years old, it works. I can't believe I learned all
Speaker 1: that on here. TikTok could go away at any moment,
Speaker 1: so you better get it now. This drove a huge
Speaker 1: spike in downloads and revenue. Next TikTok takes the fight
Speaker 1: to court. There were three separate lawsuits from TikTok, its users,
Speaker 1: and its employees. I spoke to Patrick Ryan, He's a
Speaker 1: TikTok engineer behind one of the lawsuits. He told me
Speaker 1: he felt personally attacked by Trump's executive orders. He didn't
Speaker 1: like being accused of sending data on Americans over to China.
Speaker 1: I thought about these accusations, so when I read through
Speaker 1: those things, I read those accusations not as being accusations
Speaker 1: just against the company, but his accusations against me, you know,
Speaker 1: as a employee of the company and in a position
Speaker 1: to know. Patrick says is in a position to know
Speaker 1: because he works in data security. He joined TikTok just
Speaker 1: months before Trump announced the band. Patrick left behind a
Speaker 1: cushy job at Google. He was one of hundreds of
Speaker 1: TikTok employees who joined after the pandemic. Many had never
Speaker 1: met their colleagues in person. They were already feeling vulnerable
Speaker 1: when the President started attacking their employer for something they
Speaker 1: didn't even believe they were doing wrong. I feel like
Speaker 1: I'm in the middle of a square and you know,
Speaker 1: there's just a couple of us, and I feel like
Speaker 1: we're getting kicked. And I feel like a lot of
Speaker 1: people are watching and they're not doing anything because they
Speaker 1: think that maybe we deserve it if they haven't seen
Speaker 1: any evidence. So Patrick sued the Trump administration on behalf
Speaker 1: of TikTok employees, and then there was another even more
Speaker 1: powerful lawsuit from the TikTok users themselves, Becasette and I'm
Speaker 1: suing Trump. What does this mean? That's Kasette Nab in
Speaker 1: a TikTok video. She was one of three TikTok creators
Speaker 1: that sued the Trump and Illustration to put a stop
Speaker 1: to the band. Tick talk is all about using your
Speaker 1: voice to reach a global audience, and this is what
Speaker 1: the First Amendment is all about the president's executive order
Speaker 1: is violating our freedom of speech. And this lawsuit looked
Speaker 1: like a grassroots effort, but it wasn't. Sources told me
Speaker 1: that TikTok recruited creators to file the lawsuit, connected them
Speaker 1: with powerful First Amendment lawyers, and help craft the legal strategy.
Speaker 1: In essence, TikTok orchestrated the whole thing. When I asked
Speaker 1: the company about this, they didn't want to comment. My
Speaker 1: sources told me that this lawsuit played right into a
Speaker 1: calculated strategy by TikTok to cultivate a group of everyday
Speaker 1: Americans who use the app, depend on the app, and
Speaker 1: we'll speak out in defense of TikTok. You want to
Speaker 1: make sure that you've got a array of validators and
Speaker 1: in some cases amplifiers of your message that are going
Speaker 1: to have influence in the US market. That's Brett Bruin.
Speaker 1: He's a crisis manager who was watching these lawsuits closely.
Speaker 1: Brett served as a diplomat under President Obama. There is
Speaker 1: not any better strategy that I can think of than
Speaker 1: to get the most influential voices and align them with
Speaker 1: my product, align them with my policy preferences. So it
Speaker 1: is not TikTok versus Trump. It is this army of influencers,
Speaker 1: and this is a lawsuit that worked. The judge sided
Speaker 1: with the creators and put a temporary block on the band.
Speaker 1: And the most ironic part to me was, here's Byte Dance,
Speaker 1: this company from China where speech is highly censored, and
Speaker 1: they're leaning on the US Constitution the right to free speech.
Speaker 1: So TikTok got a reprieve from the band, but there
Speaker 1: was still the matter of the sale. We'll be right back.
Speaker 1: One afternoon in September, I got an email from my
Speaker 1: colleague who reports on Microsoft. It said hearing from a
Speaker 1: source that something deal wise is likely to be announced
Speaker 1: later today. So um, get ready everyone. I started making
Speaker 1: frantic calls to all my sources to try to find
Speaker 1: out what happened. We were the first to find out
Speaker 1: that Oracle had pulled ahead. Minutes later we got word
Speaker 1: Microsoft was out, and weirdly enough, the deal wasn't announced
Speaker 1: by TikTok or Oracle, but by US Treasury Secretary Steve Manuchin.
Speaker 1: I want to be careful what I say, but I
Speaker 1: will confirm we did get a proposal over the weekend
Speaker 1: that includes Oracle as the trusted technology partner with Oracle,
Speaker 1: And once we started digging into the deal, we realized
Speaker 1: this wasn't really a sale of tick Talk. Instead, TikTok
Speaker 1: had come up with some crafty corporate restructuring where they
Speaker 1: would spin off a new company called TikTok Global and
Speaker 1: sell a steak in this new company to Oracle and
Speaker 1: its partners. As for ye Ming by Dance and their investors,
Speaker 1: they would keep eighty per cent of the company. E
Speaker 1: Ming would continue to wield outsize power on the company's decisions.
Speaker 1: We were shocked at this deal with the Oracle, even
Speaker 1: past muster with the Trump administration, because it didn't address
Speaker 1: the fact that TikTok is still a majority owned by
Speaker 1: Chinese company. But apparently Oracle was able to convince Trump.
Speaker 1: Here's Kurt, we should have known all along that the
Speaker 1: deal was going to go to the people who were
Speaker 1: closest to the president. And I remember being so confused
Speaker 1: because this was nothing that Trump had wanted. And so
Speaker 1: I remember being like, wait a second, but Trump said,
Speaker 1: I wanted this to be owned by US company and
Speaker 1: for to be completely spun off away from China, away
Speaker 1: from Bye Dances CEO John Gimming, And this was not
Speaker 1: that it was not that you start to also come
Speaker 1: to the realization that perhaps this wasn't really the security
Speaker 1: threat that it was painted to be. Right. If that
Speaker 1: were the case, then you would think that it would
Speaker 1: require byte Dance to be completely removed from the equation.
Speaker 1: So even though byte Dance was sidestepping most of Trump's demands,
Speaker 1: it appeared to be good enough for Trump. But what
Speaker 1: happened to Microsoft? They were the first to express interests
Speaker 1: in TikTok. They were all those secret meetings between the
Speaker 1: two companies. Later, Microsoft CEO Satyn Adela sat down with
Speaker 1: my colleague Emily Chang. Microsoft tried to buy TikTok and
Speaker 1: it didn't happen. Why did you want to buy TikTok?
Speaker 1: We had a very crisp vision for what we would
Speaker 1: want to do with it, uh and including, for example,
Speaker 1: addressing some of the very real concerns around national security.
Speaker 1: But that was the last summer and we moved on.
Speaker 1: He doesn't sound that sad that Microsoft lost out. Sources
Speaker 1: told us that Microsoft felt this new deal was not
Speaker 1: what they had bargained for. Microsoft wanted in when TikTok
Speaker 1: would be theirs, and there is a loan. They didn't
Speaker 1: want to own a minority stake, So Oracle wins the bid,
Speaker 1: and Trump tells reporters he gave the deal his blessing.
Speaker 1: Here's Trump in front of his blaring helicopter. We have
Speaker 1: some very big news on TikTok. TikTok is moving along.
Speaker 1: We're dealing with Oracle. But we'll see whether or not
Speaker 1: at all happens. But perceptually, I think it's a great
Speaker 1: deal for America. It will have nothing to do with China.
Speaker 1: It'll be totally secure. But that would be the last
Speaker 1: time we hear Trump talked publicly about TikTok. He moved on.
Speaker 1: Sources told me White House officials wouldn't even hern TikTok's calls.
Speaker 1: In a way, this was kind of a stroke of
Speaker 1: luck for you, Ming. Here's Kurt. I think President Trump
Speaker 1: and his administration got sidetracked. I think that the election
Speaker 1: was upcoming. I think it was shortly after this that
Speaker 1: the president got the coronavirus and was suddenly kind of
Speaker 1: out of commission for a few days. And this type
Speaker 1: of thing which he had made sure the administration was
Speaker 1: right in the middle of suddenly couldn't move forward without
Speaker 1: their cooperation, and so this deal that never crossed the
Speaker 1: finish line because there was no one there to usher
Speaker 1: it through. And then we're kind of stuck when our
Speaker 1: editors asking every day, like what's happening, what's happening, And
Speaker 1: meanwhile there was an election. Trump moves on to other
Speaker 1: fights and other challenges, and he leaves office, and he
Speaker 1: leaves office without a deal, and we never get really
Speaker 1: the ending of the story. I think that this is
Speaker 1: a totally frustrating chapter in the Trump presidency. You know,
Speaker 1: this was the business deal of the decade that never
Speaker 1: actually happened. And what bothers me the most as a
Speaker 1: reporter who spent years covering this story is that we
Speaker 1: never got to the bottom of whether there was a
Speaker 1: security threat posed by TikTok. We still don't have the answer.
Speaker 1: Trump officially leaves office, Joe Biden becomes president, and his
Speaker 1: administration makes it clear that TikTok is not a priority.
Speaker 1: The Biden administration puts an official hold on the TikTok
Speaker 1: sale process, the court proceedings, and the ban. He says
Speaker 1: he'll look into the national security risks, but sources tell
Speaker 1: us that's unlikely to happen anytime soon because Biden is
Speaker 1: busy with coronavirus and the US economy. As for the
Speaker 1: deal with Oracle, well, it's of fates, and it says
Speaker 1: of this big monumental chapter in the company's history suddenly erased,
Speaker 1: poof gone like it never even happened. And there's another
Speaker 1: piece of context I think is important. In recent decades,
Speaker 1: China has banned most US internet companies from operating in
Speaker 1: the country, and in China there's less recourse to legal challenges,
Speaker 1: but TikTok was able to capitalize on American freedoms. This
Speaker 1: is a big reason why TikTok wasn't banned or sold
Speaker 1: to a US company, because the US has democracy, an
Speaker 1: independent court system, presidential elections, and now for the foreseeable future,
Speaker 1: the US even has TikTok. I checked back in with
Speaker 1: Katie Feeney, an eighteen year old TikTok star I spoke
Speaker 1: to right after the band was announced. She had been
Speaker 1: so upset, but when I called her up six months later,
Speaker 1: to be completely honest, I forgot about it. I went
Speaker 1: from like every day I was terrified and like going
Speaker 1: crazy in my mind going back and forth and thought
Speaker 1: about what I'm going to do once TikTok has gone
Speaker 1: to just not even thinking about it at all. I
Speaker 1: feel like it's like the stages of I guess, like
Speaker 1: a breakup. I remember learning in school there's like denial
Speaker 1: and then acceptance or anger, and there's all these different stages.
Speaker 1: Like That's kind of what I felt like with TikTok.
Speaker 1: It was like I was going through an awful breakup.
Speaker 1: Katie wasn't the only one who felt like she was
Speaker 1: going through a breakup. In the end, there were many
Speaker 1: broken hearts. Trump got dumped, Microsoft got dumped, Oracle got dumped.
Speaker 1: Here's Kurt. I think these were all worlds that are
Speaker 1: used to getting their way, right. You have um the president,
Speaker 1: you have some of the top venture capitalists and all
Speaker 1: of technology. You have some of the top technology c
Speaker 1: e o s, and you have the Chinese government. Right,
Speaker 1: which of those groups usually loses? And the answer is
Speaker 1: none of them. They're all used to winning, and they're
Speaker 1: all used to kind of getting things to to go
Speaker 1: the way they want. That's such a good point and
Speaker 1: also underscores why the ending of this is so monumental
Speaker 1: because all these people who are used to getting their way,
Speaker 1: none of them got their way. The person who got
Speaker 1: their way was the CEO a Bye Dance John Uming,
Speaker 1: this Chinese entrepreneur who kind of came out of nowhere
Speaker 1: and built this company and was able to, you know,
Speaker 1: um win over all those all those different people, the
Speaker 1: Bye Dance ceo one. When I go back and listen
Speaker 1: to all my interviews, almost no one I spoke to,
Speaker 1: but you mean would come out on top. Here's where Ima.
Speaker 1: He's a very very rational person. He expected to be
Speaker 1: a very tough journey, and that he understood that this
Speaker 1: was a fight. You mean, might be unusually quiet and
Speaker 1: meek for tech ceo, but he has the personality it
Speaker 1: takes to write out the turbulence he perseveres. He prides
Speaker 1: himself on delayed gratification, and you know, in a way,
Speaker 1: he's a little massochistic, so he really has a like oll.
Speaker 1: He prised himself on having a lot of patients and
Speaker 1: um going after the really really difficult problems. This idea
Speaker 1: of delayed gratification is kind of a stereotype about Chinese
Speaker 1: executives and government officials that they can endure the short
Speaker 1: term pain and wait out the US electoral cycle because
Speaker 1: American politics are so temporary, and in China, Chi Jimping
Speaker 1: has no term limits. He's making decisions for the decades ahead,
Speaker 1: not forty five day decrees. But that's exactly what you mean.
Speaker 1: Bet on that if he actually fought back against Trump,
Speaker 1: pushed back against his own powerful investors, and delayed the
Speaker 1: ban in court just long enough that Trump would get
Speaker 1: distracted and lose interest. It took a lot of klutzbah,
Speaker 1: but he means plan worked. He was proven right. As
Speaker 1: for Alex jew, the founder who came up with so
Speaker 1: many of the original ideas behind TikTok, he also managed
Speaker 1: to hang on. He took a strategy and investment role
Speaker 1: at Byte Dance, He helped Ming on the U S
Speaker 1: TikTok deal, and even though Alex failed at politicking on
Speaker 1: behalf of TikTok and got pushed aside for an American CEO,
Speaker 1: in the end he outlasted Kevin Mayer, the guy hired
Speaker 1: to replace him. Alex remains committed to that early vision
Speaker 1: of TikTok he hatched on the train years ago. Several
Speaker 1: months after Trump left office, e Ming installed a guy
Speaker 1: named Showed Za Chew as a CEO of TikTok show
Speaker 1: his connections in the West. He went to Harvard Business
Speaker 1: School and worked at Goldman Sachs, but he speaks Chinese
Speaker 1: and lives in Singapore. And not long after that you
Speaker 1: Ming said he would be stepping down as CEO of
Speaker 1: Byte Dance. He released a statement that I want to
Speaker 1: read a few lines from. He wrote, the truth is
Speaker 1: I lack some of the skills that make an ideal manager.
Speaker 1: I'm more interested in analyzing organizational and market principles than
Speaker 1: actually managing people. Similarly, I'm not very social, preferring solitary
Speaker 1: activities like being a line, reading, listening to music, and
Speaker 1: daydreaming about what may be possible. Eman says he'll stay
Speaker 1: at the company to focus on long term strategy, but
Speaker 1: our sources tell us that you Mean will still be
Speaker 1: running the show by Dances gearing up for a massive
Speaker 1: I p O that could make you Mean one of
Speaker 1: the richest people in China. This would also put a
Speaker 1: target on his back from the Chinese government, which has
Speaker 1: been scrutinizing the country's wealthy tech moguls. This may be
Speaker 1: the reason why Eming wants to lay low and take
Speaker 1: a less public facing role. TikTok is still growing relentlessly.
Speaker 1: Teams the world over are enraptured by it, and there's
Speaker 1: no doubt in my mind it poses an existential threat
Speaker 1: to Facebook, Google and Snapchat, because even as it gets bigger,
Speaker 1: it keeps coming out with new features that get people hooked,
Speaker 1: giving TikTok even more time, more money, and more data.
Speaker 1: I wouldn't be surprised if pretty soon we see John
Speaker 1: Yuman's face on a business biography like the ones he
Speaker 1: used to read back in his college days. Because you
Speaker 1: Mean achieved many firsts. First Chinese entrepreneur to build a
Speaker 1: consumer app that became a global hit, first person to
Speaker 1: get his private business almost banned by an American president,
Speaker 1: first and only person to come out on top. You
Speaker 1: Mean and Alex have fundamentally changed the perception of Chinese
Speaker 1: tech companies. TikTok out smarted US competitors and President Trump.
Speaker 1: The company used billions of dollars to flood the world
Speaker 1: with a social media app no one had even heard
Speaker 1: of just a few years ago. Ultimately, TikTok woke the
Speaker 1: world up to the very real threat of competition from China.
Speaker 1: The tech industry and the US government may not have
Speaker 1: taken that threat seriously enough before, but they certainly are
Speaker 1: now because the US had free reign over the global
Speaker 1: Internet for so many decades without ever really having to compete,
Speaker 1: and now TikTok proves that era has ended. Foundering is
Speaker 1: hosted by me Shelley Banjo. Sean When is our executive producer.
Speaker 1: Raymondo is our audio engineer. Molly Nugent is our associate producer.
Speaker 1: Additional reporting by Kurt Wagner, Chipping Huang, Sarah Fryar, Dina Bass,
Speaker 1: Brodie Ford, Tom Giles, and Mario Parker. Special thanks to
Speaker 1: Edwin Chan, Peter Elstrom, Emily Chang, Jenny Leonard, Jennifer Jacobs,
Speaker 1: and Salaja Molson. Our story editors are Mark Million and
Speaker 1: Vander May and Molly Shoots. Francesca Levi is the head
Speaker 1: of Bloomberg Podcasts. This is our last episode about TikTok,
Speaker 1: but please stay subscribed in your feed. We'll have more
Speaker 1: exciting episodes of Foundering in just a few months.