TikTok row: China’s ByteDance gets Trump nod to avoid US shutdown

US President Donald Trump says he backs a deal in principle that would allow video app to continue operating in the US.

TikTok logo [Bloomberg]
US officials had expressed concern that personal data of as many as 100 million Americans that use the app were being passed on to the Chinese government [File: Hollie Adams/Bloomberg]

US President Donald Trump has said he supports a deal in principle that would allow TikTok to continue to operate in the United States, even as it appeared to conflict with his earlier order for China’s ByteDance to divest the video app.

TikTok will be owned by a new company called TikTok Global that will be headquartered in the US, possibly in Texas, Trump said on Saturday – a deal structured as a partnership rather than a divestment.

On August 14, Trump had signed an executive order giving ByteDance 90 days to sell TikTok.

The US Commerce Department on Friday said it would block new downloads and updates to the app beginning Sunday.

US officials had expressed concern that personal data of as many as 100 million Americans that use the app were being passed on to the Chinese government.

It was not immediately clear what spurred the White House to compromise on its push for an outright sale of TikTok.

However, the deal comes with pledges that cater to Trump’s “America First” policy agenda. It also averts alienating TikTok’s young users ahead of the November 3 US election.

ByteDance seeks $60bn valuation: Report

ByteDance, which is racing to avoid a US crackdown on TikTok, is seeking a $60bn valuation as Oracle Corp and Walmart Inc take stakes in the short-video app’s business to address US security concerns, Bloomberg News reported on Sunday, citing an unnamed person familiar with the matter.

Oracle will take a 12.5-percent stake in TikTok Global and store all its US user data in its cloud to comply with US national security requirements, the companies said on Saturday.

Retail giant Walmart said it would take a 7.5-percent stake.

The two companies would pay a combined $12bn for their stakes if they agree to a $60bn asking price, Bloomberg reported.

ByteDance, TikTok, Oracle and Walmart did not immediately respond to Reuters news agency’s requests for comment on the report.

The final valuation had not been set as the companies worked out the equity structure and measures for data security, the Bloomberg report added.

ByteDance agreed to create 25,000 new US jobs at TikTok, up from a little more than 1,000 now.

Trump, who had previously called on companies such as Oracle and Walmart to pay the US a “fee” to participate in the TikTok deal, said there would also be a $5bn US education fund as part of the deal.

“I said, you know, do me a favour, could you put up $5bn into a fund for education so we can educate people as to the real history of our country, not the fake history,” Trump told a rally of supporters in North Carolina on Saturday.

Oracle and Walmart said together with ByteDance top investors General Atlantic, Sequoia and Coatue, they would create an educational initiative to deliver an artificial-intelligence driven online video curriculum for children, from basic reading and math to science, history and computer engineering.

The companies did not say how much they would spend on the education initiative. However, they said TikTok Global would pay more than $5bn in new taxes to the US Treasury.

While ByteDance will get to keep TikTok’s source code under the deal, Oracle will get to inspect it.

Oracle CEO Safra Catz said her company was “100 percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users”.

Catz served on Trump’s transition team in 2016, while Oracle’s co-founder and chairman Larry Ellison is one of the few top technology executives to openly support the US president.

Reuters on Thursday said TikTok Global would have a majority of American directors, a US chief executive and a security expert on the board. Walmart said on Saturday its CEO Doug McMillon would serve as one of the five board members of TikTok Global.

ByteDance’s ownership of TikTok could be reduced further next year, with reports saying ByteDance was planning an initial public offering (IPO) of TikTok Global.

The Trump administration has stepped up its efforts to purge what it deems “untrusted” Chinese apps from US digital networks. An order to require app stores to stop downloads of Tencent Holding Ltd’s WeChat is still set to take effect Sunday night.

Source: Reuters