Confusion arises out of the deal that Tik Tok has reached with Oracle and Walmart to satisfy Trump’s concerns over American national security.
- Tik Tok reaches a deal
- Confusion: what officials have said about the deal
- Trump’s involvement
- What will China do?
- Who cares?
- What this could mean for us
Tik Tok reaches a deal
In the recent weeks, President Trump has threatened to ban Tik Tok and Wechat due to their connection with the Chinese government over concerns of national security. His executive order would have banned the app in America unless the company reached a deal to sell its US operations to an American company. In the past 2 weeks, Tik Tok came up with a deal with Oracle and Walmart that gained Trump’s approval.
Confusion: what officials have said about the deal
With so many parties involved in resolving this deal, the details of what the agreement entailed became very messy. The deal that Trump approved would give Oracle and Walmart a combined 20% stake in the new company with an American headquarters to operate the app, Tik Tok Global. In a joint statement by Oracle and Walmart, 4 of the 5 board members of the new company would be American.
The American board members include Walmart CEO, Douglas McMillon and three of ByteDance’s investors: William Ford from General Atlantic, Arthur Dantchik from Susquehanna Financial, and Douglas Leone from Sequoia. The only Chinese board member would be ByteDance’s founder, Zhang Yiming. This has been confirmed by ByteDance. They said that the board of Tik Tok global would “include the founder of ByteDance . . . as well as the CEO of Walmart.
Some of the confusion revolves around the ownership structure of Tik Tok Global after the deal. Oracle’s executive vice president Ken Glueck said that Bytedance would not own any part of the new company stating, “Americans will be the majority and ByteDance will have no ownership in TikTok global.”
Meanwhile, Walmart further exacerbates the confusion in stating its 20% share of Tik Tok in the new deal. This implies that ByteDance would continue to own 80% of the company which means the deal would not satisfy Trump’s concerns of national security. ByteDance claimed that TikTok would be “a 100% owned subsidiary of ByteDance” however, a person familiar with the deal said this was not true.
According to the person familiar with the deal, ByteDance’s international and Chinese investors would have a partial ownership over Tik Tok Global but the company itself would not have any ownership over the new company. Moreover, Oracle and Walmart would have 53% ownership over Tik Tok Global and the ByteDance investors would own the other 47%.
Trump’s involvement
Trump announced that he approved the Tik Tok deal “in concept.” He said, “I have given the deal my blessing.” He explained that “If they get it done, that’s great. If they don’t, that’s okay, too.” Trump said that Oracle and Walmart would “own the controlling interest… And if we find that they don’t have total control, then we’re not going to approve the deal.”
Throughout the deal making process, Trump has made it very clear that everything had to go through his approval and goals in order for the deal to be approved. Dipayan Ghosh, co-director of the Digital Platforms and Democracy Project at the Harvard Kennedy School said, “In the end, Trump is the X-factor.” Ghosh added, “Whatever he wishes will happen, no matter the merits of the related set of policies underlying the proposal.”
What will China do?
It also remains ambiguous whether the Chinese government would approve of the deal. According to Hu Xijin, the editor of the nationalist tabloid controlled by the communist party Global Times, expressed that the deal may face opposition in China. He wrote, “Based on what I know, Beijing won’t approve current agreement between ByteDance, TikTok’s parent company and Oracle, Walmart because the agreement would endanger China’s national security, interests and dignity.”
Who cares?
All of this matters because it is bigger than the ownership of the new Tik Tok company. It will determine the further international economic relationships of different global economies and how they will approach their ties to the US and China.
What this could mean for us
Based on Trump’s ban, users who already have the app downloaded would still be able to post short videos but they would not receive updates that make the app more secure. For users who do not have the app, the ban would eliminate Tik Tok from app stores.
