Former IBM CEO weighs in on TikTok deal


Dance to find a way to restructure Tic Tacs. U. S operations or face US shutdown is looming with Secretary Venusian, saying it has to be resolved by this weekend, and reports are that Oracle is the partner trying to get that deal done. Welcome. Now, someone who is no stranger to doing big tech deals with Chinese Sam Palmisano was for many years. IBM is President Seo, including when the company's sold. It's PC business. So long go back in 2005. We welcome now back to Bloomberg. Great to have you here, Sam. So I say you've actually been through this process. Give us what you learned from that process that Oracle maybe facing right now. Well, thank you, Devon. Thank you for having me. I mean the process itself. Let me just frame it on the sense that we had a period time What they were better relations relations between the two countries. I mean, China, the United States and China was also in a different phase of their growth strategy, and they were still inclined to create global businesses that could be held in China that could expand Beyond their domestic market, so the circumstances were quite different than they are today. Having said that it's an extremely complicated process is run by Treasury. That's a fair process. They make a recommendation to the president states for approval. But normally at least in our case in the process, it becomes political. In that case, then, basically because we were signed an asset that we believe was just going to be commoditized. It was not a lot of technical differentiation and a PC as you see today, but fundamentally of the various parties on the hill got engaged, and it made it complicated, which meant we had to go through a second review, which prolonged everything, which puts the deal in jeopardy issue. They say time kills deals, but fundamentally, we hung in there and we got approval from both governments would perceive it. It's clear and nothing else is clear. It's clear that whatever Tic Tac has is not commoditized, use your word. Whether it's the algorithms being used, or the date of the personal data, which seemed to be the real center piece of the concern of national security, and therefore this deal is more complicated. How you really protect those data. Is that the big sticking point as far as you can tell I think it isyou know, I really do think it's It's a combination of the algorithms and the personal data on the the amount of the personal data and that's called the uses of the personal data now, their solutions that could be having been shutting people down those sorts of things, and I really do think that There's a pragmatic solution on the table that perhaps both governments could approve. That would at least take one issue off the temple in the U. S China relations and Let me explain what I mean by that, the current what I read anyway. Like you. We only know it's been reported, is that bike dance would maintain majority share of Tic Tac, but they would create a global entity that would be held the United States. Mark will be a technology partner and provide that infrastructure e clown except which makes sense for article on maybe by doing this sort of thing. If you can solve the issues around personal data and the uses of personal data, protect people's privacy that could be resolved. But you still the government approval on both sides and the Chinese also have the equivalent of devious In their in their processes. Well, yeah, it's clear that the Chinese have really a dog in this fight without a doubt. But is it possible from your experience to really for the US government to really be assured that those personal data cannot go back to the Chinese government is I think that was the thing that we're concerned about, right? Well, absolutely, And basically, you know the complicated thing here. We don't have any details. Let's start with the structure itself. The majority owner being bike dances. It's obviously a Chinese company. What's the government's model? Who's on the board of that house? Did any operate? They have passive investor, right you on and on and on, is in a financial deal. There's an operation if it's an operational deal, because we're complicated now as faras protecting the day that exists if it's all housed in the United States. It's somewhat easier, but nonetheless, I mean information's gonna be flying across the world, So you're always gonna run the risk of any us any nation or really any happier being able to get into that kind of an infrastructure. Now, having said that? I mean, I think a partner like Arco or an IBM enterprise tech companies have a lot of experience of protecting data. They do this for themselves and for large enterprises. Probably a better partner than let's say, your traditional consumer tech company might be able to provide. Well, that's exactly my question, because I don't think of oracles being a consumer facing tech business. Unlike a Microsoft or unlike a Google or a Facebook, why does this make sense strategically for Oracle? Oh, I think it actually thie take about clouds in the emerging architecture for computing in the future are co is way behind as it is, I'd be having made the other traditional enterprise players and leaders as we all know where Amazon and catching up his Microsoft, so to them. It gives them I think an entry point with a very large social media company into the infrastructure. I think we'll give them credibility and cloud and a moving into the future. So from that perspective to teach me that makes a heck of a lot of sense. They're going to be a minority investor. It's almost like an outsourcing deal and in the sense that you operate people's assets for them. But you acquired his assets and the acquisition is access will be equity get only is buy bread, so I don't have any insight to that. So you know they'll make an investment. They'll get the outsourcing of the infrastructure that would be House United States. And that will create jobs. I don't know if it's 25,000 or not. I mean, you're the reason why 25,000 to me. Sounds like a large numbers. Because Facebook is bigas. They are only has 75,000 employees. And finally, Sam. What if, In fact, it does not get approved if in the end President Trump says, I don't like this. What does that mean? Maybe for Oracle, but more importantly, for bike dance. Well, I think at the end of the day, I mean, well, they shut them down. I don't know, You know, I mean, I think quite honestly there ways to solve these problems are national security concerns concerns. I can understand that it's really the bigger issue is protecting protecting people's personal information. In fact, the matter is that David that you go all that information's already been hacked. I mean, I know everybody forgets about the OPM Hack and the IRS hack well that there's a ton of personal information's already been hacked his eyes over the world. I assume in China's well there's tons of personal information are ready on the Internet everyday based upon people's user. Behavior and what they do on the Internet. So I mean, I do think it's necessary and it companies need to protect people's privacy in the data, But I'm not sure that this deal represents what's necessary to solve that problem. Fascinating. Thank you so much salmon. Nobody. I'd rather talk to about this than you. That's former IBM CEO Sam Palmisano. More

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