President Trump has approved a deal that would create a partnership between the Chinese app TikTok and Oracle and Walmart to manage TikTok’s operation in America. TikTok’s Chinese parent, ByteDance, will own a majority share of the company and maintain ownership of TikTok’s all-important algorithms.
CNBC reports that President Trump recently approved a deal in which Oracle and Walmart will partner with the popular Chinese-owned video-sharing app TikTok in the United States, allowing the app to continue to operate within the country.
Speaking to reporters on the White House South Lawn before departing for North Carolina, President Trump stated: “I have given the deal my blessing — if they get it done that’s great, if they don’t that’s okay too. I approved the deal in concept.”
The U.S. Department of Commerce announced that it would delay the prohibition of U.S. transactions with TikTok until next Sunday as the deal is officially reviewed and approved. Before President Trump’s comments, Oracle announced that it was chosen as TikTok’s secure cloud provider and will become a minority investor in the company with a 12.5 percent stake.
TikTok has confirmed Oracle’s role and stated that it was now working with Walmart on a commercial partnership. Walmart stated that it has agreed to purchase a 7.5 percent stake in the company and CEO Doug McMillon would serve as one of the five board members of the newly created company.
A Walmart spokesperson said in a statement: “In addition, we would work toward an initial public offering of the company in the United States within the next year to bring even more ownership to American citizens.”
TikTok’s Chinese parent company, ByteDance, will own 80 percent of TikTok according to one source. However, due to 40 percent of ByteDance being owned by U.S. venture capital firms, the Trump administration can now claim that TikTok Global is a majority American owned business.
TikTok plans to maintain and expand its headquarters in the United States while bringing 25,000 jobs across the U.S. Trump stated that a new company will likely be incorporated in Texas.
— TikTok_Comms (@tiktok_comms) September 19, 2020
The companies will also make a $5 billion contribution towards an education fund, according to President Trump. Oracle and Walmart said in a statement that the global TikTok business will pay over $5 billion in new taxes to the U.S. Treasury Department and that the companies and TikTok investors would build and provide online videos to teach kids about a number of subjects including history and science.
“We’re going to be setting up a very large fund for the education of American youth and that’ll be great,” the president said. “That’s the contribution I’ve been asking for.”
Read more at CNBC here.