ByteDance says TikTok will be its sub­sidiary un­der deal with Trump

The Pak Banker - - FRONT PAGE - BEI­JING -AFP

China's ByteDance said on Mon­day that TikTok's global busi­ness will be­come its sub­sidiary, even as Or­a­cle Corp and Wal­mart Inc said over the week­end that they and U.S. in­vestors would own the ma­jor­ity of the video app fol­low­ing a deal with U.S. Pres­i­dent Don­ald Trump's ad­min­is­tra­tion.

Trump signed an ex­ec­u­tive or­der on Aug. 14 giv­ing ByteDance 90 days to sell TikTok, amid con­cerns that the per­sonal data of as many as 100 mil­lion Amer­i­cans that use the app could be passed on to China's Com­mu­nist Party gov­ern­ment. On Satur­day, he said he sup­ported a deal in prin­ci­ple that would al­low TikTok to con­tinue to op­er­ate in the United States.

Ac­counts of the deal dif­fer. ByteDance said on Mon­day that it will own 80% of TikTok Global, a newly cre­ated U.S. com­pany that will own most of the app's op­er­a­tions world­wide. Or­a­cle and Wal­mart, which have agreed to take stakes in TikTok Global of 12.5% and 7.5% re­spec­tively, had said on Satur­day that ma­jor­ity own­er­ship of TikTok would be in Amer­i­can hands.

ByteDance in its state­ment on Mon­day said it was a "ru­mor" that U.S. in­vestors would be TikTok Global's ma­jor­ity own­ers and that ByteDance would lose con­trol over TikTok. Or­a­cle de­clined to com­ment on ByteDance's state­ment, while Wal­mart did not re­spond to a re­quest for com­ment. Some sources close to the deal have sought to rec­on­cile the dis­crep­ancy by point­ing out that 41% of ByteDance is owned by U.S. in­vestors, so by count­ing this in­di­rect own­er­ship TikTok Global would be ma­jor­ity owned by U.S. par­ties. One of the sources said the deal with Or­a­cle and Wal­mart val­ues TikTok Global at more than $50 bil­lion.

TikTok also con­firmed plans for an ini­tial pub­lic of­fer­ing of TikTok Global. The Bei­jing-based firm said TikTok

Global's board of di­rec­tors will in­clude ByteDance founder Zhang Yim­ing as well as Wal­mart's chief ex­ec­u­tive Doug McMil­lon and cur­rent di­rec­tors of ByteDance. The com­pany de­clined to fur­ther com­ment on who else would be among the di­rec­tors. Or­a­cle and Wal­mart said in a joint state­ment on Satur­day that four out of the five board of di­rec­tors will be Amer­i­cans.

The cur­rent plan for TikTok Global does not in­volve any trans­fer of al­go­rithms or tech­nolo­gies, and Or­a­cle will be able to in­spect TikTok U.S.'s source code, ByteDance said. This is akin to U.S. com­pa­nies such as Mi­crosoft Corp shar­ing their source code with Chi­nese tech­nol­ogy ex­perts, ByteDance added. Or­a­cle and Wal­mart have said all of TikTok's tech­nol­ogy will be in pos­ses­sion of TikTok Global.

ByteDance also said a $5 bil­lion pay­ment of taxes TikTok Global is re­port­edly sup­posed to make to the U.S. Trea­sury is based on es­ti­mated in­come and other taxes the com­pany will need to pay over the next few years and has noth­ing to do with the deal reached with Or­a­cle and Wal­mart.

Trump last week had said there would be a $5 bil­lion U.S. ed­u­ca­tion fund as part of the deal but ByteDance has said it was not aware of this. ByteDance own­ing the ma­jor­ity of TikTok Global and the al­go­rithms means that ByteDance is "not out of the game" and has avoided the worst-case sce­nario, China's state-run news­pa­per Global Times said in an edi­to­rial pub­lished on Sun­day.

Shen Yi, a Fu­dan Univer­sity pro­fes­sor, said in a sep­a­rate ar­ti­cle pub­lished in the Global Times on Mon­day that Trump's nod to the deal "could even been seen as a re­ver­sal of U.S. Pres­i­dent Don­ald Trump's ex­ec­u­tive or­der is­sued in Au­gust" and that it was helped by a "con­certed ef­fort" by the Chi­nese gov­ern­ment, ByteDance and U.S. do­mes­tic forces. "If the Trump ad­min­is­tra­tion makes more moves to block the deal, it may en­counter di­rect checks and bal­ances from in­ter­est groups of Wall Street."

TikTok has pro­posed a global coali­tion of so­cial me­dia firms for early iden­ti­fi­ca­tion and removal of harm­ful con­tent, the com­pany said on Tues­day, as net­work­ing apps face a bar­rage of crit­i­cism over is­sues rang­ing from mis­in­for­ma­tion to data pri­vacy. The com­pany, owned by China's ByteDance and at the cen­ter of a political bat­tle be­tween Wash­ing­ton and Bei­jing, said it had sent let­ters to nine com­pa­nies for a mem­o­ran­dum of un­der­stand­ing on con­tent mod­er­a­tion.

In­di­vid­ual con­tent re­view ef­forts by each plat­form can be ad­vanced through a for­mal and col­lab­o­ra­tive ap­proach, the short-video app said. TikTok did not name the com­pa­nies it had reached out to but said it had pro­posed a meet­ing be­tween the firms to dis­cuss the mat­ter. The app, a rel­a­tive new­comer to the so­cial me­dia land­scape, has had fewer in­stances of wrestling pub­licly with the per­sis­tent con­tent mod­er­a­tion scan­dals that have dogged larger and more en­trenched com­peti­tors like Face­book Inc FB.O and Twit­ter Inc TWTR.N. Sep­a­rately, TikTok said on Mon­day it had re­moved over 104 mil­lion videos from its plat­form glob­ally in the first half of the year for vi­o­lat­ing its terms of ser­vice.

"Of those videos, we found and re­moved 96.4% of videos be­fore a user re­ported them, and 90.3% were re­moved be­fore they re­ceived any views," TikTok said in its trans­parency re­port. (bit.ly/3iTy0vl) The com­pany said on Tues­day it got 1,768 re­quests for user data, with 290, or 16.4%, of those from U.S. law en­force­ment agen­cies. ByteDance has been rac­ing to avoid a crack­down on TikTok af­ter be­ing at log­ger­heads with the U.S. gov­ern­ment.

US of­fi­cials have ex­pressed con­cerns that per­sonal data of as many as 100 mil­lion Amer­i­cans that use the app is be­ing passed on to China's Com­mu­nist Party gov­ern­ment.

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