President Donald Trump approved a deal on Saturday between ByteDance, the Chinese parent company of mobile app TikTok, and Oracle, the American software giant. Additionally, US-based Walmart will take a minority stake in the venture. The agreement came only a day before a deadline that would have prohibited downloads of TikTok in the United States. A weeklong extension is being allowed for ironing out of details.
Despite President Trump’s comment that he wanted TikTok to be completely American-owned, ByteDance will maintain an 80% ownership stake. Meanwhile, the deal gives Oracle a 12.5% stake in the platform and 7.5% ownership to Walmart. But, the agreement hands over much of the operational control to its United States partners. In fact, the deal stipulates the creation of a new company, to be called TikTok Global, which will be headquartered in the US. Additionally, four of TikTok Global’s five board seats will go to Americans.
Although the deal does not hand over full control of the company to an American buyer, as stipulated in Trump’s August executive order, the President told reporters that he has given the deal his “blessing.”
“If they get it done, that’s great,” Trump said. “If they don’t, that’s okay, too.”
The entire saga around the sale of TikTok from Beijing-based ByteDance to a US-based company is born of data concerns. As a Chinese entity, ByteDance is at the mercy of the Chinese Communist Party, which the Trump Administration fears could access American user data at any time.
But the new deal, while leaving ByteDance with majority ownership, will ensure that American data is not accessible overseas. Oracle said that it would host all data connected to American users on its own cloud platform. In a statement, TikTok confirmed that Oracle will be “responsible for hosting all US user data and securing associated computer systems to ensure US national security requirements are fully satisfied.”
“We are currently working with Walmart on a commercial partnership as well,” the statement added. “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.”
Safra Cruz, the CEO of Oracle and a friend of President Trump’s, doubled-down on the assurance of data privacy:
“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.”
All involved parties now have until September 27 to finalize the proposal.