Oracle and Walmart have agreed to acquire a 20% stake in TikTok’s global business as part of a pre-IPO financing round, the ByteDance owned video-sharing platform announced in a press release on Saturday, moments after President Donald Trump told the press that he had given his “blessing” to the deal.
According to Oracle’s press release it will acquire 12.5% of the video sharing platform, which presumably places Walmart’s stake at 7.5%.
As part of the deal, Oracle will serve as TikTok’s “secure cloud technology provider” while Walmart will be commercial partner, although it is unclear as to what that role would entail.
While TikTok’s annoucement confirms previous reports of a planned IPO for the video sharing platform it does not provide any further details regarding the same.
The Wall Street Journal, citing a source, reported that U.S. companies and investors would have a 53% ownership of the new company, while Chinese investors would have a 36% stake, with other investors largely from Europe having 11%, this person said.
The deal still has to be formally approved by U.S. regulators, but Trump on Saturday told reporters he likes the agreement “in concept” and gives it his blessing, however, it still falls short of Trump’s initial ask for TikTok to be sold entirely to a U.S. company.
Trump said the new entity would likely be incorporated in Texas and include a “$5 billion contribution” for a “large fund” for the “education of American youth,” though neither TikTok nor Oracle have confirmed those details.
In its press release, Oracle said it will “combine its secure cloud technology with continuous code reviews, monitoring, and auditing to provide unprecedented assurance that U.S. TikTok user data is private and secure.” Earlier this week Bloomberg had reported that Oracle will get full access to TikTok’s source code and updates to ensure the platform’s Chinese parent cannot add any security backdoors to access data from the app’s U.S. users.
The Oracle proposal, which was first announced last week, faced pushback from Republican lawmakers including Sen. Josh Hawley (R-MO) who wrote an open letter to the Treasury Department calling for it to reject the deal on national security grounds. Sen. Marco Rubio (R-FL) and a group of other Republican lawmakers had also written to Trump asking him to reject any deal that would allow “China-based or controlled entities to retain, control or modify the code or algorithms that operate any U.S.-based version of TikTok.”
The Trump administration said Friday it will remove TikTok from the App Store and the Google Play store on Sunday, the most aggressive action to date against the Chinese-owned company. It is unclear if that will still happen as a deal comes together. The White House has targeted TikTok over concerns the Chinese government could force it to hand over data on American users, though has previously said it would not comply with such a request.
What To Watch For
Apart from the U.S. government the proposed deal will also require approval from Beijing, TikTok’s Chinese parent ByteDance had said on Thursday. Last month, the Chinese government added AI technologies—including ‘‘personalized content recommendation” tools like the one used by TikTok—to its export controls list, effectively necessiating the Beijing’s approval for any deal.