US President Donald Trump on Saturday said that he had approved a deal allowing Silicon Valley giant Oracle Corp to become the data partner for TikTok to avert a shutdown of the massively popular Chinese-owned video app that Washington has called a security risk.
The deal, announced by the companies, also includes Walmart Inc as a commercial partner and would create a new US company named TikTok Global.
“I think it’s going to be a fantastic deal,” Trump said. “I have given the deal my blessing. If they get it done that’s great, if they don’t that’s okay too.”
Shortly afterward, TikTok — owned by China’s ByteDance Ltd (字節跳動) — confirmed the agreement.
ByteDance was racing to avoid a crackdown on TikTok after the US Department of Commerce said on Friday that it would block new downloads and updates to the app from yesterday.
Under the order, Tencent Holdings Ltd’s (騰訊) WeChat was to lose functionality in the US from yesterday.
ByteDance is seeking a valuation of US$60 billion for TikTok. Oracle could buy a 12.5 percent stake in TikTok before a future IPO, and Walmart a 7.5 percent stake.
The two companies would pay a combined US$12 billion for their stakes if they agree to a US$60 billion asking price, Bloomberg reported.
ByteDance would keep the rest of the shares, but as the Chinese company is 40-percent owned by US investors, TikTok would eventually be majority US-owned, a source close to the matter said.
“We are pleased that the proposal by TikTok, Oracle and Walmart will resolve the security concerns of the US administration and settle questions around TikTok’s future in the US,” a TikTok spokeswoman said.
ByteDance also confirmed the deal on social media, saying that the three companies would reach an agreement that was “in line with US and Chinese law” as soon as possible.
If it comes to fruition, the deal could mark the de-escalation of a technology battle between Washington and Beijing.
It could also allow Americans to continue using the wildly popular app; the US Department of Commerce announced that it was postponing the ban on TikTok downloads until Sunday, citing “recent positive developments.”
Trump has claimed for weeks that TikTok is collecting user data for Beijing, without ever providing evidence for his allegations.
Trump said that the “security will be 100 percent” and that the companies would use separate cloud servers.
The deal would lead to the creation of a new company, headquartered in Texas, that would have “nothing to do with China” but would still be called TikTok, he said.
Oracle would be in charge of hosting all US user data and the security of the associated computer systems, while Walmart would supply its online sales, order management and payment services.
In a joint statement, Oracle and Walmart said TikTok Global would “pay more than 5 billion in new tax dollars to the US Treasury,” while they and the other companies involved in the deal would launch an initiative to develop online education.
Additional reporting by Bloomberg
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