Welcome Your IET account
TikTok app on phone

Oracle and Walmart to take minority stake in TikTok Global

Image credit: Dreamstime

Following weeks of frantic discussions, Beijing-based ByteDance has agreed a deal with Oracle and Walmart in which the two US-based companies will become minority investors in TikTok Global.

US President Donald Trump has been threatening an imminent ban on TikTok – one of the world’s most popular apps – in the US, claiming that the app was a national security threat which could pass on US user data to the Chinese government. Tiktok has always denied the claims.

TikTok's parent company, ByteDance, has been engaged in discussions with a number of US-based companies, with a view to either selling TikTok’s US operations or agreeing some other deal which would satisfy the White House.

Last week, software giant Oracle emerged as the favoured candidate. Under the terms of the deal, Oracle will become a “trusted technology provider” for TikTok’s US operations, managing TikTok’s US user data and claiming a stake in its US operations. Trump gave his informal approval for the deal in principle this weekend.

Now, further details of the deal have been unveiled in a Chinese-language statement from ByteDance, which said that TikTok Global will remain its subsidiary.

This contradicts reports that the app will be in US majority control. In an interview with Fox News, secretary of state Mike Pompeo commented that TikTok Global would be “controlled by Americans” with ByteDance as a “passive shareholder”, while Trump said that TikTok “will have nothing to do with any outside land, any outside country, it will have nothing to do with China”.

ByteDance dismissed claims that TikTok Global would be controlled by US companies as rumours. According to ByteDance, Oracle and Walmart will take 12.5 per cent and 7.5 per cent stakes respectively in TikTok Global. ByteDance will also launch a limited round of pre-IPO financing in TikTok Global that will give it an 80 per cent stake.

According to Reuters, a source said that the deal valued TikTok Global at more than $50bn.

There will be no transfer of algorithms or other technologies overseas – which would require ByteDance to gain approval from the Chinese government – but Oracle will have access to TikTok US’ source code for security inspections. Oracle will be responsible for hosting US users’ data on US-based servers.

TikTok Global’s board of directors will include ByteDance founder Zhang Yiming, current directors of ByteDance, and Walmart CEO Doug McMillon. However, Oracle and Walmart claimed in a joint statement last week that four out of the five board of directors would be US citizens.

The agreement was well-received by Chinese state-run media, with the Global Times saying in an editorial published on Sunday that ByteDance maintaining majority control of TikTok Global means that it is “not out of the game” and has avoided the worst-case scenario (being forced to sell TikTok Global).

ByteDance also said that a $5bn payment reportedly due to be made to the US Treasury by TikTok Global is based on estimated income and taxes and has nothing to do with the government getting a "cut" of the Oracle-Walmart deal, as Trump has previously suggested should be the case.

Meanwhile, Trump’s attempts to block the Tencent-owned messaging app WeChat in the US has been blocked by a US Magistrate Judge Laurel Beeler, who said that the ban raised serious questions about protection of free speech.

Sign up to the E&T News e-mail to get great stories like this delivered to your inbox every day.

Recent articles

Info Message

We use cookies to give you the best online experience. Please let us know if you agree to all of these cookies.


Learn more about IET cookies and how to control them