The Big Story

Save the last dance for Larry

In the end, it looks like the only tangible outcome from six weeks of TikTok drama would be a shift in cloud providers.

After months of bluster about the need to protect American TikTok users from the sinister aims of the "Chinese Communist Party," the Trump administration appears set to give its blessing to a plan from ByteDance that not only awards Oracle a cloud deal with a fast-growing social media phenomenon, but also a stake in a new company. According to the Financial Times, a new entity headquartered in the U.S. will license the TikTok tech from ByteDance, and Oracle, as a minority investor, will be responsible for managing TikTok's U.S. data.

The proposal is subject to a national security review that was still ongoing Wednesday morning. Despite the fact that the original goal of Trump's strategy was to ensure TikTok's U.S. operation was controlled by a U.S. company, ByteDance, headquartered in China, would remain the majority shareholder in this new operation, according to multiple reports.

And that's why this outcome would be so troubling: Some TikTok data already runs in two American clouds, AWS and Google.

• ByteDance had to submit a proposal for review by the Committee on Foreign Investment in the United States that involved "a trusted technology partner," revealed to be Oracle over the weekend.
• It's difficult to imagine that AWS and Google would make a list of cloud companies the Trump administration considers trusted technology partners, after years of complaints about Amazon CEO Jeff Bezos' ownership of the Washington Post and a rush-job antitrust investigation of Google.
• Microsoft tried to thread this needle by negotiating with both ByteDance and the administration (in, frankly, embarrassing fashion) but TikTok's machine-learning technology was a key part of the deal for Microsoft, and Chinese regulators made it clear the algorithm was not for sale.
• Microsoft also said that ByteDance was not on board with its plans for "significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation" in a terse statement Sunday evening.

If the U.S. government is willing to accept that ByteDance will still own a majority of a U.S.-based TikTok, and therefore retain access from within China to the executives and engineers who handle the content and data of American users, then what we've witnessed is a government-initiated technology transfer of some portion of the cloud activity dedicated to TikTok's U.S. users from AWS and Google to Oracle. None of the initial concerns about Chinese ownership of TikTok would have really been addressed.

• Oracle has made a lot of strides with its cloud computing business, but it's impossible to conclude that it offers the best overall package of cloud services needed to support a fast-growing company like TikTok.
• It does, however, have Larry Ellison, who has spent a portion of the fortune he amassed as Oracle co-founder, chairman and chief technology officer on very public support for a president who is not particularly well-liked in Silicon Valley.
• Safra Catz, Oracle's CEO, also has close ties to President Trump, and her name has been floated as a candidate for jobs in the administration over the last few years.
• Oracle has won some interesting cloud business this year, most notably taking on some of the excess load dumped on Zoom during the early days of the pandemic, but "trusted" is not a word that two decades of tech buyers who endured Oracle's at-times hostile sales practices would probably use.

The last time we visited this topic in Protocol Cloud, the part of the TikTok deal that seemed most troubling was President Trump's insistence that the U.S. Treasury get some sort of cut of the deal, which implied that a new way of doing business was coming for Silicon Valley's M&A teams.

This would be worse.

• In a little less than two months, the president would have forced a transaction that will shift some degree of cloud business from two companies he does not like to one company he does.
• "I have a high respect for Larry Ellison. He's somebody I know, he's been really a terrific guy for a long time," Trump said Tuesday afternoon.
• If ByteDance had sold majority control of TikTok's U.S. operation to Oracle or Microsoft, the president would at least be able to claim that the Chinese government couldn't get its hands on U.S. user data.

And if the Trump administration's only main concern was making sure ByteDance hosted U.S. TikTok user data in the U.S. according to certain security specifications, TikTok's own data centers and existing cloud partners would have been more than capable of fulfilling that demand.

Instead, it threatened to ban TikTok, a legally and logistically dubious action for a president to take regarding a single mobile application, creating the conditions that, if the deal receives final approval, will steer that business to a campaign supporter.

A MESSAGE FROM YUBICO

Join us at noon ET on Sept. 24 for The Evolution of Cybersecurity event with Protocol's Tom Krazit and Kevin McAllister. Our panel of experts will discuss how the cybersecurity playing field is always evolving, and in this new era of work, how business leaders should ensure that security is a fundamental part of their technology strategy. Featuring Absolute Software's president and CEO, Christy Wyatt; CI Security's founder and CISO, Michael Hamilton; and Microsoft's corporate VP, Joy Chik. This event is presented in partnership with Yubico.

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This Week On Protocol

Moar qubits: IBM updated its quantum computing road map Tuesday, promising to ship a 1,000-qubit computer by 2023. But as Protocol's Mike Murphy reports, the true gains of quantum computing won't arrive until much bigger machines are possible, and nobody is quite sure how to get there.

Cashing chips: Nvidia's $40 billion acquisition of Arm is a bet that flexible chip designs married to powerful machine-learning technology will drive the next generation of enterprise computing. Regulators and Arm customers might be skeptical about Nvidia's intentions for Arm's chip licensing business, but should Nvidia make everybody happy, it could become the most powerful chip company of that next era.

Little code, lots of money: Airtable's latest funding round values the company at $2.5 billion, as interest in low-code and no-code tools continues to grow. It also launched a marketplace for customers to find other apps built with its technology as well as new features that make building custom apps easier for teams within a company.

Five Questions For...

Sam Kroonenburg, co-founder and CEO, A Cloud Guru

What was your first tech job?

I first connected to the internet at 13 years old and became a self-taught programmer. I launched my own small software company and spent my high school years building shareware software and selling it online. At the same time, I spent Saturdays working at a computer store attached to an auction yard. We assembled computers for sale from all the spare parts we salvaged from computers sold at auction.

Pick one piece of consumer or business software (that isn't sold by your company) that you can't live without.

Google Docs. In a world of remote and flexible work, the ability to collaborate with teams members asynchronously is key. Each person can contribute to a piece of work at their convenience, within their own schedule and within their time zone. Documents, slides and spreadsheets that allow everyone to build together and collaborate remotely is critical for productivity in the workplace of today and tomorrow.

What was the first computer that made you realize the power of computing and connectivity?

It sounds cliched, but the first iPhone in 2007. I had been on the internet since the mid-'90s, but I still remember the feeling I had the first time I used the iPhone "on the go." I fired up the browser and accessed a website on the bus, from this tiny device in my hand that let me fully interact without a computer … no more pared back and useless "mobile site" experience. It was an incredible moment of awe, where I realized that the general population was now going to connect with computing and each other, on a scale never before seen.

What was the biggest reason for the success of cloud computing over the past decade?

It has been exciting to watch the cloud platforms become public commodities, where everyone has equal access. This has revolutionized the competitive landscape, giving even small startups access to the same computing power as many of the world's largest companies. If a business doesn't adopt cloud, its competitors will, and quickly they'll be able to provide more innovative solutions to customers at lower prices.

Will the pandemic usher in a new era of remote working, or will we all come back together when it is safe to do so?

Workplaces and the way people work will change dramatically as a result of the pandemic. Much of this change will be talent-led. The key will be finding the balance between creating exceptional and inclusive employee experiences regardless of whether someone is in the office or working from home.

Around the Cloud

• Oracle reported earnings last week that showed revenue growth after a dip last quarter.
• If Amazon CEO Jeff Bezos ever steps back and, I don't know, launches himself into space, The Washington Post made the case that AWS CEO Andy Jassy might be his most likely successor.
• VMware CEO Pat Gelsigner sent out some pretty strong signals about what you're going to hear about at the VMworld conference in two weeks: Kubernetes and the company's Tanzu multicloud app development platform during the event, mainly.
• And VMware COO Sanjay Poonen sat down with The Information to lay out how important subscription software strategies have become to any company doing business on the modern cloud.
• Even VMware corporate parent Dell Technologies has recognized that hardware companies also need to operate as services businesses, revealing plans to introduce new consumption-based models in the coming weeks.
• Zoom is reportedly working on a messaging service that would live inside its ubiquitous video-calling app, allowing the company to pitch itself as a central hub for business collaboration.
• Google announced new climate goals that mean it would run all of its cloud business on carbon-free energy sources by 2030, a more aggressive target than its rivals have committed to.
• Microsoft's undersea data center experiment came up for air, and the company said that servers hosted in the Project Natick submarine unit actually failed less than regular landlubber servers in its above-ground data centers.
• AWS is reportedly working on a new AI service that would use machine learning to help detect problems in industrial equipment so they can be fixed before causing major problems.
• As open-source projects have become so important to enterprise computing, leadership roles inside those projects have sometimes gotten messy. Stack Overflow takes a nice look at some of the issues involved, and how some projects have made it work.

A MESSAGE FROM YUBICO

Join us at noon ET on Sept. 24 for The Evolution of Cybersecurity event with Protocol's Tom Krazit and Kevin McAllister. Our panel of experts will discuss how the cybersecurity playing field is always evolving, and in this new era of work, how business leaders should ensure that security is a fundamental part of their technology strategy. Featuring Absolute Software's president and CEO, Christy Wyatt; CI Security's founder and CISO, Michael Hamilton; and Microsoft's corporate VP, Joy Chik. This event is presented in partnership with Yubico.

RSVP today.