TikTok’s Chinese parent ByteDance issued a statement on its public WeChat account on Monday morning, clarifying details of the deal between the short video app, Walmart, and Oracle, noting that ByteDance will remain in control of TikTok Global, the new company that operates TikTok’s US business, and founder Zhang Yiming will have a seat on the board.
According to ByteDance, TikTok Global, headquartered in the US, will be a wholly-owned subsidiary of the Chinese company. The board will include the ByteDance founder, existing ByteDance board directors, and Walmart’s CEO. The new company plans an initial public offering (IPO) to further enhance its corporate structure and transparency. Prior to the IPO, there will be a financing round, after which ByteDance will hold a stake of 80%.
Walmart issued a statement on September 19, saying that TikTok Global will be majority-owned by American investors, including Oracle and Walmart. Notably, since many early investors of ByteDance—including Sequoia Capital, General Atlantic, and Coatue—all have American background and the new company is mulling an IPO in the US, US investors could own a majority.
Additionally, ByteDance claimed that the current deal doesn’t involve any transfer of algorithms or technology, although Oracle will have the right to review the source code of TikTok US for security reasons. In response to the reported USD 5 billion tax dollars that TikTok would pay to the US Treasury, the company said that it is a forecast based on the income tax and other operating taxes that TikTok will need to pay for its business development in the coming years and unrelated to the deal.
On September 18, the US Commerce Department said that any moves to distribute or maintain WeChat or TikTok on an app store will be prohibited, starting from Sunday. Downloads of the two apps soared after the announcement. TikTok downloads rose 12% to 247,000 in the US on Friday, compared to Thursday, while WeChat reached 10,000 installs on Friday, up 150% from the previous day, according to industry research firm Sensor Tower.
One day after that, on September 19, President Donald Trump said he has approved a deal between ByteDance and Oracle. “I have given the deal my blessing,” Trump said to reporters. “If they get it done, that’s great. If they don’t, that’s okay, too.” The Commerce Department said that it would delay—by one week—restrictions that were originally to take effect on Sunday.
TikTok said on Twitter in a statement that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the US Administration and settle questions around TikTok’s future in the US. It also promised to bring over 25,000 jobs over time.
In the joint press release issued on September 19, Walmart and Oracle also elaborated on the proposal. The retailer has tentatively agreed to purchase 7.5% of TikTok Global as well as to enter into commercial agreements to provide e-commerce, fulfillment, payments, and other omnichannel services to TikTok Global.
In the meantime, Oracle will become TikTok’s secure cloud provider. Data privacy for 100 million American TikTok users will be quickly established by moving all American data to Oracle’s Generation 2 Cloud data centers.