Trump agrees to Oracle deal for TikTok in US

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Donald Trump has given his “blessing” to ByteDance’s deal with Oracle to keep TikTok operating in the US, after he had threatened to ban the Chinese company’s popular short-video app.

“I have given the deal my blessing, if they get it done that’s great, if they don’t that’s fine too,” Mr Trump said. “I approved the deal in concept.”

The US president’s backing comes after intense negotiations between ByteDance and the Trump administration over concerns the app posed a threat to national security.

The US commerce department added it would delay an order to remove TikTok from Apple and Google’s US app stores to September 27, giving the companies more time to finalise the details of the deal.

Under the terms of the agreement, ByteDance will spin-off TikTok’s global business into a new US-headquartered company that will be majority owned by the Chinese tech group.

Oracle and US retailer Walmart will take a stake of up to 20 per cent of the new company pre-IPO, according to TikTok. The discussions, which are not yet finalised, value the new company at $50b-$65bn, according to people familiar with the matter.

Oracle and Walmart said in a joint statement that the new company would be “majority owned by American investors”. However, while their 20 per cent stake — along with longstanding US investments in ByteDance — might leave American investors indirectly benefiting from most of the economic interest in the new company, direct majority ownership and control was set to remain with the Chinese group.

Mr Trump had previously requested ByteDance sell its entire US operations of TikTok. At the time, US national security officials argued this was the only way to guarantee that China would not try to use backdoors into the app to spy on American citizens.

Under the agreed deal, ByteDance will keep control of the algorithm which decides which videos are shown to each user. However, Mr Trump said China would have no influence.

“It will have nothing to do with China, it’ll be totally secure, that’ll be part of the deal,” Mr Trump said. “The security will be 100 per cent. They’ll be using separate clouds and a lot of very, very powerful security.”

Oracle chief executive Safra Catz, who was in Mr Trump’s 2016 transition team, said: “We are a hundred per cent 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.”

Oracle and Walmart said all of TikTok’s technology would be “in possession” of the new company, though they did not immediately respond to questions about what level of ownership or control the entity would have over it.


$5bn


Amount ByteDance will donate to a US educational fund as part of the deal

Any deal will also need to be approved by China. Beijing announced sweeping powers to curb trade, investment and operations of foreign companies deemed “unreliable” on Saturday, in a move seen as retaliation against punitive US actions towards Chinese businesses.

China said it planned to create an “unreliable entities list” in May 2019 after the US sanctioned telecoms manufacturer Huawei, but it has not announced details or named targeted companies.

The deal is set to be lucrative Oracle, which is expected to be paid hundreds of million of dollars annually to manage the app’s data.

Larry Ellison, co-founder and chairman of Oracle, is a rare Silicon Valley supporter of Mr Trump and has held at least one fundraiser to help get the president re-elected in 2020.

TikTok’s board will be composed exclusively of American citizens and will include a security committee led by a person with government security clearances, said people briefed about the matter. The US administration will have to approve both the board members and the head of the security committee.

Doug McMillon, chief executive of Walmart, is expected to get a seat on TikTok’s board.

Mr Trump also said the Chinese company would donate $5bn to an educational fund, which the US president said would address his earlier promise that ByteDance would pay the US government a fee for the transaction.

However, ByteDance said in a statement on Sunday that it had first heard about the $5bn education fund from media reports. 

Mr Trump said TikTok would create at least 25,000 jobs, predominantly in the Republican-controlled state of Texas, which would make it one of the largest employers in America among social media companies.

“We are pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the US administration and settle questions around TikTok’s future in the US,” said ByteDance in a statement.

Additional reporting by Kiran Stacey in Washington and Ryan McMorrow in Beijing

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