End of TikTok's woes? Trump approves Oracle's bid for TikTok
TikTok finally appears to be finalizing a way to prevent itself from getting banned in the United States. The company has announced that it will be bringing Oracle and Walmart as partners to address the concerns of the US government and continue serving millions of Americans. President Donald Trump has also said that he approves the deal in concept. Here's all about it.
Up to 20% stake to be sold to American companies
A few hours ago, TikTok announced that they have confirmed a proposal under which both Oracle and Walmart will participate in a TikTok Global financing round and take up to 20% cumulative stake in the company. Oracle, in particular, will become a technology provider, responsible for hosting all US user data and securing associated computer systems to allay Trump administration's national security concerns.
Oracle will take 12.5%, Walmart 7.5%
Oracle and Walmart have also issued statements confirming the agreement. The former said it will take a 12.5% stake in TikTok, which will run on Oracle Cloud, while the latter announced it has tentatively agreed to purchase a 7.5% stake. Notably, a commercial partnership is being planned between TikTok and Walmart, and the retailer giant's CEO is also set to join TikTok Global's board.
Here's what Oracle CEO Safra Catz said on the deal
"Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. We are a hundred percent 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."
President Trump approves the deal in concept
As reported by CNBC, President Donald Trump said that he has given his approval to the deal "in concept." "I have given the deal my blessing — if they get it done that's great, if they don't that's okay too," Trump told reporters at the White House. "I approved the deal in concept." The Chinese side is yet to sign off on the transaction.
ByteDance owns 80% of TikTok Global, but there's a catch
If this deal goes through, Chinese giant ByteDance will own the rest (80%) of TikTok Global. However, as about 40% of ByteDance would be owned by US firms, Trump administration could technically claim that American investors own a majority of TikTok, either directly or indirectly. ByteDance's stake might dilute even more with an IPO of TikTok Global on a US stock exchange next year.
TikTok will also be creating 25,000 jobs
In addition to this restructuring, TikTok Global will also be expanding its US headquarters, creating about 25,000 jobs - up from 1,000 at the moment. Additionally, the company will also pay over $5 billion in new taxes to the US Treasury Department and would deliver artificial-intelligence driven online video curriculum to teach kids about basic reading and math to history, science and other subjects.
How this will change TikTok's ban order?
The US Commerce Department had announced a ban on TikTok, but in light of these developments and President Trump's approval, the order might be lifted, allowing TikTok to operate in the US. As of now, the ban, which would have blocked new downloads of the service from September 20, has been delayed by a week, with further updates awaited from the Commerce Department.