In early August, President Donald Trump gave ByteDance, TikTok’s parent company, 90 days to either sell the app to a US tech firm or risk losing 100 million users from the US. Trump cited threats to national security as he accused ByteDance of supplying user data to the Chinese government. Since then, the deal has gone through countless hurdles, but it finally looks like a resolution is close.
The complicated ordeal started when Microsoft launched a joint bid with Walmart for the purchase of TikTok. At the time, American computer software company Oracle was also in the race for the popular app. However, in late August, China imposed new governmental restrictions on exports in an attempt to block TikTok’s sale. These restrictions were related to artificial intelligence (AI) interfaces and content recommendation analysis. The app’s algorithm relies heavily on such domestic technology, and with the sale deadline edging closer, it seemed that there was no hope left for TikTok in the US.
TikTok attempted to challenge this by suing the US government over the executive orders issued by Trump.
In September, Trump announced that if no deal was reached soon, he would ban any new downloads and updates of TikTok starting from Sept. 20, eventually banning the app completely on Nov. 12.
ByteDance then decided to pursue a new path with the deal, creating a US subsidiary for the app called TikTok Global. This tentative deal would make TikTok Global partly owned by American companies Oracle and Walmart. The company’s five board members will consist of four Americans with the fifth member being ByteDance founder Zhang Yiming. Trump decided to delay the ban for a further week.
The deal is anything but complete. The proposed model suggests that Oracle and Walmart will own 20 percent of TikTok Global, while ByteDance will hold a majority share of 80 percent. A statement by Oracle’s vice president reads that, “Upon creation of TikTok Global, Oracle and Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global.”
The new company plans to float on the stock market. That means that it will offer the shares for sale on the stock market for the first time. By holding a public listing, TikTok Global ensures transparency as they are obligated to publish quarterly reports. Shareholder meetings are also going to be more open to the public. The deal also allows Oracle to check the source code of TikTok in the US. “The security will be 100 percent,” Trump said on Sept. 12, “Conceptually it’s a great deal for America.”
The president also said that TikTok Global would be “totally controlled by Oracle and Walmart.” The new company is set to be based in Texas.
The company is said to have agreed to make a huge 5 billion USD donation to the state’s educational fund. “They’re going to be setting up a very large fund,” the president said. “That’s their contribution that I’ve been asking for.”
ByteDance has said that the 5 billion USD tax payment to the US Treasury was a projection of corporate income tax and other operating taxes TikTok would need to pay for business development in the US. Bloomberg News reported that ByteDance is seeking a 60 billion USD valuation for TikTok Global.
“I have given the deal my blessing,” Trump told reporters at the White House when asked about the deal. Teens in the US carefully hold on to this lifeline. Their beloved TikTok might make it out alive after all.
