Audio By Carbonatix
U.S. President Donald Trump said on Saturday he supported a deal in principle that would allow TikTok to continue to operate in the United States, even as it appeared to conflict with his earlier order for China’s ByteDance to divest the video app.
ByteDance was racing to avoid a crackdown on TikTok after the U.S. Commerce Department said on Friday it would block new downloads and updates to the app come Sunday.
U.S. officials had expressed concern that the personal data of as many as 100 million Americans that use the app was being passed on to China’s Communist Party government.
Trump signed an executive order on Aug. 14 giving ByteDance 90 days to sell TikTok. The deal announced on Saturday, however, is structured as a partnership rather than a divestment.
TikTok will be owned by a new company called TikTok Global and headquartered in the United States, possibly in Texas, Trump said.
Oracle Corp ORCL.N will take a 12.5% stake in TikTok Global and store all its U.S. user data on its cloud to comply with U.S. national security requirements, the companies said.
Retail giant Walmart Inc WMT.Nsaid it would take a 7.5% stake in TikTok Global. The implied valuation for TikTok Global as a result of these investments could not be learned.
While Oracle and Walmart said that TikTok Global will be majority-owned by U.S. investors, this is the case only if ByteDance’s investor base is taken into account, according to a source familiar with the matter who requested anonymity to discuss the deal’s structure. This is because ByteDance will own 80% of TikTok Global, the source said.
Given that U.S. investors currently own about 40% of ByteDance, the White House will count that towards how much of TikTok Global is owned by U.S. parties, the source added. As a result, Oracle, Walmart, and ByteDance’s U.S. investors will own, directly or indirectly, about 53% of TikTok Global, a second source said.
Beijing-based ByteDance did not immediately respond to a request for comment. Walmart and Oracle also did not offer more information on TikTok Global’s ownership structure.
It was not immediately clear what spurred the White House to compromise on its push for an outright sale of TikTok.
However, the deal comes with pledges that cater to Trump’s “America First” policy agenda. It also avoids alienating TikTok’s young users ahead of the Nov. 3 U.S. election.
ByteDance agreed to create 25,000 new U.S. jobs at TikTok, up from a little over 1,000 now. Trump, who had previously called on companies such as Oracle and Walmart to pay the United States a “fee” to participate in the TikTok deal, said there would also be a $5 billion U.S. education fund as part of the deal.
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