President Trump told reporters Saturday that he has approved the deal between Oracle and TikTok “in concept,” and the U.S. Department of Commerce followed up by issuing a statement that stayed Sunday’s ban of the app for one week.
In its “Statement on Delayed Prohibitions Related to TikTok,” the department said “in light of recent positive developments, Secretary of Commerce Wilbur Ross, at the direction of President Trump, will delay the prohibition of identified transactions pursuant to Executive Order 13942” until Sept. 27 at 11:59 pm.
Oracle’s proposal for TikTok includes big-box retailer Walmart Inc., which President Trump emphasized as a “great American company” in comments to the media outside the White House on the way to his rally in North Carolina. “I have given the deal my blessing,” Trump said. “I approved the deal in concept.”
Trump noted that the company will be based in the U.S., probably Texas, with all data hosted in the U.S. He also said the deal would create 25,000 jobs and include a $5 billion fund for education.
As for why this bid passes muster, he explained that “security will be 100 percent. They’ll be using separate clouds and very, very powerful security.”
National security has been at the heart of concerns from U.S. officials, who have taken aim at Chinese-owned TikTok and WeChat. On Friday, the Commerce Department ordered the removal of both apps from Google and Apple’s mobile app stores on Sunday. As it stands, it appears WeChat will be the sole outcast.
The President’s stamp of approval bodes extremely well for the deal, however, a formal review and official approval are still pending. The Chinese government must also approve the transaction for it to proceed.
Oracle issued a statement Saturday that it will be “TikTok’s secure cloud technology provider.”
In the announcement, Oracle chief executive officer Safra Catz confirmed plans for a new entity called TikTok Global. “As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global,” she said.
“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud,” Catz said. “We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world.”
TikTok has also gone on record, confirming the emergence of TikTok Global, as well as discussions with Walmart on a “commercial partnership.” Both Oracle and Walmart will “take part in a pre-IPO financing round in which they can take up to a 20 percent cumulative stake in the company,” said a company statement. According to Oracle, its stake alone will be 12.5 percent.
— TikTokComms (@TikTokComms) September 19, 2020
As for the status of TikTok’s lawsuit, ahead of Saturday’s revelations, the company was gearing up for a fight against the Sunday ban. Now that it’s postponed and the Oracle-Walmart bid appears to be moving along, the company seems to be breathing a sigh of relief.
On Saturday afternoon, the developer tweeted “TikTok is here to stay!” with a video message from the interim chief Vanessa Pappas.
— TikTok (@tiktok_us) September 19, 2020
Other details of the deal have not yet been made public, including how the deal is structured around TikTok’s underlying recommendation algorithms. It appears that Oracle will have full access to the app’s source code, but current TikTok owner ByteDance has told Chinese media that it refuses to sell the technology.
As it stands, it looks like TikTok Global will be owned by Oracle, at 12.5 percent, and Walmart, at 7.5 percent, with ByteDance retaining 80 percent. Apparently, in calculating the majority American ownership, the Trump administration appears to be factoring in the 40 percent stake in the company by U.S.-based venture capital firms.