Trump gives blessing to deal to allow TikTok to continue to operate in US

Trump gives blessing to deal to allow TikTok to continue to operate in US

President Trump departs the White House on campaign travel to Fayetteville, North Carolina
President Donald Trump speaks to the media on the South Lawn of the White House in Washington, before his departure on campaign travel to Fayetteville, North Carolina on Sep 19, 2020. (Photo: REUTERS/Yuri Gripas)

WASHINGTON/NEW YORK: US President Donald Trump said he supports a deal that will allow TikTok to continue to operate in the United States, after threatening to ban the Chinese-owned app in August.

He told reporters at the White House he backs the deal with TikTok owner ByteDance, Oracle and Walmart to create a new company that will assume TikTok's US operations called TikTok Global.

Trump said the new company will be "totally controlled by Oracle and Walmart ... All of the control is Oracle and Walmart".

US shareholders are expected to control 53 per cent of TikTok Global, a person briefed on the matter said, while Chinese investors will hold 36 per cent.

Oracle said it will take a 12.5 per cent stake in TikTok Global.

TikTok said under the deal, Oracle and Walmart will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20 per cent cumulative stake in the company.

The source said the remaining 80 per cent of shares will be distributed to ByteDance investors, a source briefed on the matter said.

US investors currently own about 40 per cent of Bytedance.

READ: Millions of US users to be hit by WeChat block

Tiktok said it was "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".

Tiktok said Oracle will become the company's "trusted technology provider, responsible for hosting all US user data and securing associated computer systems to ensure US national security requirements are fully satisfied."

Trump offered strong support for the deal he said would create 25,000 US jobs. "I have given the deal my blessing," Trump said. "I approve the deal in concept."

About 100 million Americans use TikTok and US officials have expressed concern about user data and the potential for China to access that data.

"The security will be 100 per cent," Trump told reporters.

Reuters reported on Thursday that TikTok Global will have a majority of American directors, a US chief executive and a security expert on the board.

Oracle and Walmart are expected to take significant equity stakes and ByteDance has agreed to significant security safeguards on the data of US users with Oracle housing all data and getting the right to inspect the TikTok source code.

Walmart did not immediately comment.

The Commerce Department said on Saturday it will delay by one week an order that had been set to take effect late Sunday that would stop Alphabet Inc's Google and Apple Inc from offering TikTok in their US app stores.

Trump expressed annoyance this week that government lawyers told him it was not permissible to demand a "chunk" of any TikTok sales price for the Treasury.

He said there would be a US$5 billion US education fund as part of the deal. "That's their contribution I've been asking for," Trump said.

He said the new company will most likely be incorporated in Texas and have at least 25,000 employees.

Reuters reported on Thursday that ByteDance is planning a US initial public offering of TikTok Global. The filing of an IPO for TikTok Global would be on a US stock exchange and could come in about a year, the sources said, requesting anonymity because the matter is confidential.

Part of the proceeds from the IPO are expected to be used to finance the US$5 billion education fund, the source said. ByteDance and Oracle did not immediately respond to requests for comment.

China still must approve the deal. "We'll see whether or not it all happens," Trump said.

Texas Governor Greg Abbott said earlier on Twitter that he had talked to Trump about the deal. 

"I let him know that if he approves the deal Texas would be the perfect place for the HQ," Abbott said.

Source: Reuters