Donald Trump gave his blessing for Oracle, Inc. to purchase the U.S. operations of the popular social media platform TikTok. Also taking a piece was Walmart, Inc. The deal was finalized just hours before a ban on the sale of TikTok and WeChat apps in the U.S. was to take effect.
The Commerce Department said it would delay a ban by one week to give the parties time to completely wrap up a deal. But with Trump’s blessing, the new company shouldn’t have any problems getting the Commerce Department’s approval.
The agreement has Bytedance retaining a majority of TikTok’s assets and control over the app’s algorithm, and Oracle and other US investors taking minority stakes, Bloomberg said.
“Oracle will get full access to review TikTok’s source code and updates to make sure there are no back doors used by the company’s Chinese parent to gather data or to spy on the video-sharing app’s 100 million American users,” Bloomberg reported, citing information from unnamed sources.
TikTok was always concerned that its algorithm would fall into American hands. The Chinese government made clear that unless ByteDance was allowed to maintain ownership of the algorithm, they would not agree to the sale. Beijing must sign off on the deal to make it official.
“As part of this proposal, Oracle will become our trusted technology provider, responsible for hosting all US user data and securing associated computer systems to ensure US national security requirements are fully satisfied,” the spokesperson said. “We are currently working with Walmart on a commercial partnership as well. Both companies will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20% cumulative stake in the company. We will also maintain and expand TikTok Global’s headquarters in the US, while bringing 25,000 jobs across the country.”
The jobs are a nice feather in Trump’s campaign cap. Texas Governor Greg Abbott is already maneuvering to have the choice of headquarters for the new entity to be located in Texas.
I let him know that if he approves the deal Texas would be the perfect place for the HQ.
We’ll see. 👀#TikTok
— Greg Abbott (@GregAbbott_TX) September 19, 2020
Oracle CEO Safra Catz appears quite satisfied. It’s not exactly a shotgun marriage but the fact that the U.S. operations of a multi-billion-dollar company pretty much fell from the sky into her lap must please her.
“As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global,” said Oracle CEO Safra Catz. “Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world. This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders.”
China is complaining about U.S. “bullying” and is threatening to retaliate — an empty threat because they really have nothing to retaliate with. TikTok was a soft target in the trade war and Trump hit it hard. The company would have survived a U.S. ban — it has nearly a billion users in China alone — but it would have been diminished globally.