President Trump has tentatively approved a plan for Oracle and Walmart to acquire the U.S. operations of social video app TikTok from Chinese technology giant ByteDance.
The deal will see the creation of a new company called TikTok Global, which will oversee the U.S business. As part of the agreement, Oracle will acquire a 12.5 percent stake in the company and will offer cloud computing services to support the app. Walmart, meanwhile, will acquire a 7.5 percent stake and will provide eCommerce fulfillment and payments support, among other things.
The temporary approval from President Trump has led the Department of Commerce to delay the ban on downloading the TikTok app that was set to go into effect this coming Sunday, while it reviews the details of the deal.
If approved, the deal would put an end to months of controversy that has surrounded the future of the app and will result in the creation of a new ownership structure, wherein ByteDance will maintain 80 percent ownership in the newly formed U.S. entity and Walmart and Oracle will own the remaining 20 percent.
Still, the ironing out of the finer details of the deal is very much a work in progress. In a rally in North Carolina on Saturday, Trump floated the idea of requiring TikTok to create a $5 billion education fund. “So we can educate people as to [the] real history of our country — the real history, not the fake history,” Trump said.
The announcement reportedly took ByteDance by surprise as it was not aware that an education fund was even part of the deal.
“Some news media reported that TikTok will set up a $5 billion education fund in the United States,” ByteDance said in a statement on Sunday. “We would like to clarify that it was also our first time hearing about the news.”
While confusion over the details of the deal remains, if the deal goes through, it would create a formidable marketing and social commerce platform that will threaten the market share of social media and tech players such as Amazon, Facebook, Google and Snap Inc.
China changes its tune
With details of the deal coming out, the Chinese state media is casting doubts on Beijing’s interest in approving the agreement in its current state. State-backed Global Times accused the U.S. of applying “hooligan logic” just two days after calling the deal reasonable and indicating at the possible likelihood of the Chinese government approving the deal in its current form.
In an article titled “Say ‘No!’ to US robbery of TikTok,” the Global Times op-ed pointed to several terms of the deal as unacceptable.
“It caters to the unreasonable demands of Washington. It’s hard for us to believe that Beijing will approve such an agreement,” the Monday op-ed read.
The state-run media company took issue with U.S. executives taking four out of the five board seats in TikTok Global and ByteDance’s CEO and Founder Zhang Yiming taking the remaining one, according to CNBC. The op-ed also took issue with Oracle getting to inspect the source code of TikTok, which Global Times suggests is very similar to that of Douyin, the Chinese version of TikTok, which is also owned by ByteDance.
How Beijing responds to the deal in its current form remains to be seen, but it is worth noting that the messaging put forth by Global Times often closely aligns with that of the Chinese government.