President Trump on Saturday gave his “blessing” for a deal in which Oracle and Walmart would help lead TikTok in the U.S., saying it addresses his concerns about the popular video streaming app’s ties to China.
Under the deal, TikTok would become an American company, most likely incorporated in Texas, and add 25,000 jobs in the U.S., Trump said. The company would also donate $5 billion to American education, he added.
“We’ll see whether or not it all happens,” Trump said. “But conceptually, I think it’s a great deal for America.”
TikTok did not immediately respond to a request for comment. The company’s China-based parent company ByteDance has been under pressure by the Trump administration to divest all of its TikTok U.S. operations by Nov. 12 or risk having the app banned.
Trump had signed an executive order that requires companies to remove TikTok from the App Store on midnight Monday — which would ban new downloads of the app — and make software updates no longer available. The president had expressed concern that TikTok’s parent company could be giving information on U.S. users of TikTok to the Chinese government.
TikTok said it has not done that and that the company stores U.S. user data in Virginia and backs it up in Singapore.
In an response issued earlier Friday, TikTok said it objected to the Trump administration’s move to stop new downloads of its app. TikTok said its proposal to address Trump’s concerns included “third-party audits, verification of code security and U.S. government oversight of U.S. data security.”
The deal would give Walmart, Oracle and American investors a 53% stake in TikTok, while Chinese investors would have 36% ownership, according to the Wall Street Journal, citing an unnamed source.
Any deal involving ByteDance divesting TikTok’s operations would also require the approval of the Chinese government.
Trump said he believes it’s going to be “a fantastic deal,” adding “the technology’s superior to anything in the world and we like that.”
“It’ll be a brand new company,” Trump said. “It will have nothing to do with China. It’ll be totally secure.”
Oracle beat out other suitors for TikTok’s operations, including its rival Microsoft.
Some analysts believe the deal will benefit Oracle, which is based in the San Francisco Bay Area and competes against Microsoft in cloud computing. TikTok users produce lots of videos, requiring a stable platform — and that’s where Oracle comes in, said Ray Wang, founder of Constellation Research Inc. in the Silicon Valley.
“They want to go after as many of these workloads as there are, because that allows you to keep building out your cloud, to get your cloud bigger and bigger,” Wang said.
Oracle already has data that, combined with TikTok’s, could help it build an advertising network, Wang said. In 2014, Oracle acquired Cupertino-based BlueKai, which helped companies personalize their mobile marketing campaigns.
Oracle has close relations to the Trump administration. The company’s co-founder Larry Ellison hosted a Trump campaign fundraiser and is a supporter of the president. Oracle Chief Executive Safra Catz also served on Trump’s transition team.
Walmart’s involvement with TikTok could help it reach younger audiences.
“This could give Walmart a huge competing edge to Amazon,” said Eugene Lee, chief executive of Creator.Cash, a San Francisco-based app that provides financial tools and savings accounts to video creators. “Walmart probably is salivating at the mouth to be able to provide an e-commerce angle to these creators who are capturing the attention and the eyeballs of hundreds of millions and soon to be billions of people here.”
TikTok creators have expressed concern about a ban on the TikTok app. Many remember what happened to Vine, a popular video app that shut down after it was bought by Twitter, forcing creators to rebuild their fanbases elsewhere.
Three TikTok creators, including USC student Cosette Rinab, on Friday also filed a lawsuit in federal court in Philadelphia against the Trump administration. The creators said the executive order violates their constitutional rights, including the 1st Amendment.
“It’s upsetting that 2020 is just full of Americans watching our freedoms be taken away from COVID-19, to TikTok,” wrote Carly Lind, a 29-year-old L.A. TikTok creator, in a text message. “Isolated from my friends, family, job as if that weren’t enough, the one app I found happiness in AND was able to make a lucrative income is now being taken away.”
Lind has 20,000 followers on her main TikTok account. Even if TikTok were to gain new owners, it’s unclear whether Oracle and Walmart will be able to harness what made TikTok popular.
“The only thing I’m worried about is whoever buys the app will run it into the ground like Vine,” Lind said.
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