Bid to handle TikTok’s US operations gets prez nod
Oracle and Walmart would pay a combined $12 billion for their stakes if they agree to the asking price
NEW YORK: Donald Trump gave his blessing to Oracle Corp.’s bid for the American operations of TikTok, putting the popular video-sharing app on course to escape a US ban imposed as part of his pressure campaign against China.
“I approved the deal in concept,” Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina. “If they get it done, that’s great. If they don’t, that’s OK too.”
The new company, which will be called TikTok Global, has agreed to funnel $5 billion in new tax dollars to the US and set up a new education fund, which
Trump said would satisfy his demand that the government receive a payment from the deal. “They’re going to be setting up a very large fund,” he said. “That’s their contribution that I’ve been asking for.”
Oracle plans to take a 12.5% stake in the new TikTok Global, while Walmart Inc. said it has tentatively agreed to buy 7.5% of the entity. Walmart’s CEO Doug McMillon will serve on TikTok Global’s board of directors, the retailer said in a statement. Four of the five board seats will be filled by Americans.
TikTok’s Chinese owner ByteDance Ltd. is seeking a valuation of $60 billion for the app, according to a person familiar with the matter. Oracle and Walmart would pay a combined $12 billion for their stakes if they agree to that asking price. The final valuation had not been set as the parties worked out the equity structure and measures for data security. Terms are still in flux and the proposed valuation could still change.
The TikTok deal was forced by a pair of bans Trump issued in August over concerns that ByteDance posed a national security risk, thrusting the video-sharing app into the center of the President’s confrontation with Beijing. Shortly after Trump signalled his approval, the Commerce Department on Saturday delayed by a week a ban that would have forced Apple and Alphabet Inc.’s Google to pull the TikTok video app from their US app stores.
BEIJING: China’s ByteDance Ltd is seeking a valuation of $60 billion for TikTok as Oracle Corp. and Walmart Inc. take stakes in the short-video app’s business to address US security concerns, according to a person familiar with the matter.
Oracle and Walmart have rights to buy 12.5% and 7.5% respectively of a newly established TikTok Global under an agreement that won the approval of US President Donald Trump, the person said, asking not to be named discussing private negotiations. The two companies would pay a combined $12 billion for their stakes if they agree to that asking price.
The final valuation had not been set as the parties worked out the equity structure and measures for data security, the person said.
Terms are still in flux and the proposed valuation could still change. Beijing also has yet to approve the deal, though regulators are said to favour any transaction in which ByteDance maintains control of its valuable recommendation algorithms and other proprietary technology.
ByteDance was pressured into a deal for TikTok when Trump threatened to ban the app in the US over national security concerns. After Microsoft Corp. made a proposal for a full buyout of the service, ByteDance instead turned to Oracle’s offering in which the Chinese parent will maintain a solid majority stake.
“I approved the deal in concept,” Trump told reporters Saturday as he left the White House for a campaign rally in Fayetteville, North Carolina. “If they get it done, that’s great. If they don’t, that’s OK too.”
ByteDance and Oracle representatives didn’t immediately respond to requests for comment.
The valuation for TikTok has been a looming question as Washington and Beijing escalated their rhetoric over the negotiations. The service for the US market alone has been estimated to be worth $20 billion to $50 billion, or even more. Snap Inc., for context, trades at a $35 billion valuation.
ByteDance, the Beijing-based parent company, is the most valuable private startup in the world at $140 billion, according to market researcher CB Insights.
The TikTok Global deal does not include the app’s China twin, Douyin, which has become an enormous hit in its own right.
ByteDance may end up owning as much as 80% of TikTok Global, which would include the app’s operations in the US and the rest of the world excluding China.
Venture firms, including Sequoia Capital and General
Atlantic, may also acquire equity in the new business.
Under the current proposal, there will be five seats on the board of TikTok Global. Walmart chief executive officer Doug McMillon will become a director, the retailer said in a statement.
TikTok Global will likely be headquartered in Texas and will hire “at least” 25,000 people, Trump said. It will need to hire thousands of content moderators, engineers, and marketing staff that were previously located in China and around the world.
TikTok Global intends to hold an initial public offering within 12 months, Oracle and Walmart 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, according to people familiar with the matter.
The US software giant has given reassurances it can protect TikTok user data from foreign influence.
“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud,” chief executive officer Safra Catz said in a statement. “We are a 100% confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users.”