TikTok sale deadline elapses as negotiations with US continue
According to a person familiar with the matter, the deadline for the Chinese owner of TikTok is expected to expire on Friday to fulfill a government order to sell the US activities of the short-form video app, even if negotiations are set to continue.
A week ago, the U.S. Foreign Investment Committee extended ByteDance for seven days while reviewing the deal. An executive order issued by President Donald Trump in August set an initial deadline for November 12th. The company has received two renewals from CFIUS, which reviews foreign acquisitions for national security risks.
ByteDance has signed a preliminary deal with software company Oracle and retail giant Walmart, but the agreement has yet to be finalized. There was also confusion about the terms of the deal, including the level of control each company will have over TikTok and whether the deal will address national security concerns.
According to Reuters, Trump is said to have personally decided against an additional extension.
The White House and Justice Department did not immediately respond to a request for comment. A spokesman for the CFIUS finance department said the committee “is working with ByteDance to complete the divestiture and other steps required to resolve the national security risks arising from the transaction in accordance with presidential decree from August 14th. ”
A forced sale wasn’t the only threat TikTok faced from the Trump administration. Trump also issued another executive order, which would have been enforced by the Department of Commerce, to block all US transactions with ByteDance, amid concerns that the data collected by TikTok “would allow the Communist Party of China to access American personal and proprietary information.” could enable “. Federal judges in Washington and Pennsylvania have blocked the ban.
Here’s what you need to know:
What’s going on between TikTok, Oracle and Walmart?
Oracle and Walmart would collectively get a 20% stake in a new company called TikTok Global, which is expected to go public next year. Four of the five members on TikTok Global’s board of directors will be American.
Oracle will host all US user data on its cloud platform and will have the task of “securing associated computer systems,” according to a statement from TikTok.
“We are one hundred percent confident that we can provide a highly secure environment for TikTok and ensure data protection for American users of TikTok and users around the world,” said Safra Catz, CEO of Oracle, in a statement.
TikTok Global also plans to create 25,000 US jobs as part of an expansion of its global headquarters, which will remain in the US. TikTok Global will pay more than $ 5 billion in new tax dollars to the U.S. Treasury Department, according to Walmart. An educational program will also be created to “Develop and Deploy an AI-Driven Online Video Curriculum” that includes courses in math, reading, science, history and computer technology for children.
Does that mean ByteDance owns 80% of TikTok Global?
There is confusion about what role ByteDance would play in TikTok Global. ByteDance announces that it will hold an 80% stake in TikTok Global before the new company goes public.
Ken Glueck, executive vice president of Oracle, said in a statement: “After TikTok Global is formed, Oracle / Walmart will make their investment and TikTok Global shares will be distributed to their owners. Americans will be the majority and ByteDance will not to have.” Owned by TikTok Global. “
A person familiar with the deal told the Wall Street Journal that byteDance technically does not own TikTok Global as the shares are being given to ByteDance investors. About 40% of ByteDance is owned by US venture capital firms.
Meanwhile, a group of US Republican lawmakers have urged Trump to reject the deal if ByteDance continues to have control over TikTok’s US operations, data and algorithms. Trump has signaled that he wouldn’t approve a deal if Walmart and Oracle didn’t have the most control over TikTok Global.
“They will own the controlling stake. Everything will be moved to a cloud created by Oracle … and completely controlled by Oracle,” he told Fox News. “If we find that they are not in complete control, we will not approve the deal.”
Why does Walmart want a stake in TikTok?
TikTok has experimented with e-commerce features. Over the past year, the company started allowing some users to add links to ecommerce websites so that users can purchase products that will be shown in videos.
Walmart said it will “bring its omnichannel retail capabilities, including its Walmart.com range, e-commerce marketplace, fulfillment, payment and measurement-as-a-service advertising service, to TikTok.”
Will the Chinese government approve the TikTok-Oracle deal?
China reportedly objected to a forced sale of TikTok’s US operations, but the current deal structure is not a full divestment. Still, there are signs that Beijing is not entirely satisfied with the proposal.
“As far as I know, Beijing will not approve the current agreement between ByteDance, the parent company of TikTok, and Oracle, Walmart, as the agreement would endanger China’s national security, interests and dignity,” tweeted Hu Xijin, editor-in-chief of Global Time. The tabloid is supported by the Chinese Communist Party.
In August, China issued new restrictions on the export of artificial intelligence technologies, which delayed the TikTok deal. Under the current proposal, ByteDance will not transfer its algorithm and technology to Oracle, which could please Chinese regulators.
The litigation is hardly over. TikTok haspending against the Trump administration to block the possible ban. While federal judges have blocked the ban, the US government is appealing.
Steve Musil contributed to this report.