Talk about TikTok whiplash, although that’s normal thing these days. Hours before a new ban was supposed to be put in place to block new downloads and updates of the popular video-sharing app, President Donald Trump has come out to say there is a deal, and it has his “blessing.”
Trump announced the deal to reporters outside the White House on Saturday. He said he had approved a deal “in concept” between TikTok, Oracle and Walmart. The new deal apparently involves American companies and investors holding 53% of equity in TikTok, the New York Times reported. It would also lead to the creation of a new company called TikTok Global, of which Oracle and Walmart would together have up to a 20% stake. TikTok Global will be based in the U.S.
According to the Wall Street Journal, TikTok’s current Chinese owner, ByteDance, would retain roughly 80% ownership of TikTok Global. However, since U.S. investors own approximately 40% of ByteDance, the new company with equity stakes for Oracle and Walmart can be described as having a majority American ownership.
“I have given the deal my blessing,” Trump said. “If they get it done that’s great, if they don’t that’s fine too.”
As a result, the Commerce Department is delaying its plans to block TikTok from U.S. app stores for a week. The department had been planning to ban TikTok on Sunday. This latest twists caps off weeks of drama sparked by the Trump administration’s concern that TikTok could be forced to hand over U.S. user data to Chinese intelligence agencies, an allegation the company has always strongly denied.
In a statement provided to Gizmodo, TikTok confirmed the deal and said it was “pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the U.S. administration.”
“As part of this proposal, Oracle will become our trusted technology provider, responsible for hosting all U.S. user data and securing associated computer systems to ensure U.S. national security requirements are fully satisfied,” TikTok said. “We are currently working with Walmart on a commercial partnership as well. Both companies will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20% cumulative stake in the company. We will also maintain and expand TikTok Global’s headquarters in the US, while bringing 25,000 jobs across the country.”
Walmart said in a statement it had tentatively agreed to purchase 7.5% of TikTok Global and enter into commercial agreements to provide its “ecommerce, fulfillment, payments and other omnichannel services to TikTok Global.” The company added that its CEO, Doug McMillon, would be one of the five board members of TikTok Global and that it would work towards an IPO of the company in the U.S. within the next year “to bring even more ownership to American citizens.”
But, as can be expected, this doesn’t mean that TikTok is out of hot water. For one, although the president has reviewed the deal, it still hasn’t received formal approval by the administration, per the Times. It cited a statement from the Treasury Department, which maintained that approval of the deal is subject to “a closing with Oracle and Walmart and necessary documentation and conditions to be approved by [the Committee on Foreign Investment in the United States].”
Also known as CFIUS, the committee is in charge of protecting U.S. national security by reviewing foreign investments.
Then there’s China, which is mighty cranky at the president for his attempts to block some of its most successful apps. In recent days, China has indicated that it would rather see TikTok shut down in the U.S. than see ByteDance commit to a forced sale of the app.
On Twitter, TikTok appeared to celebrate the deal, although it didn’t speak about it in specific terms. In a video posted to Twitter, Vanessa Pappas, interim head of TikTok, thanked the app’s supporters.
“We are here for you—and we are here for the long run. That’s why we’re thrilled to share that we are working with a U.S. tech partner to ensure that TikTok can continue to provide a home to each and every one of you—just as it does today, with no change to our users here in the U.S. or around the world,” Pappas said. “We are TikTok, we are on this journey together and we are just getting started.”
— TikTok (@tiktok_us) September 19, 2020
And of course, there’s also Trump, who is unpredictable and apparently also got some key facts wrong about the deal when he announced it, saying that the deal would “have nothing to do with China” even though Chinese investors would retain a significant stake in the new company. When someone tells him that his statement is, eh, not true, will the deal still have his blessing?
Honestly, who the heck knows. Until we have more information, at least rest assured that you can use TikTok for one more week without exposing yourself to massive cybersecurity threats.