US President Donald Trump approves TikTok deal with Oracle, Walmart

TikTok has managed to stave off a ban in the biggest market it operates in, but the intriguing saga is far from over.

TikTok has staved off a ban in the US. Picture: Olivier Douliery/AFP

US President Donald Trump has agreed to the “concept” of a deal where two American companies will become partial owners of a new spin-off version of the Chinese viral video app TikTok, which he previously sought to have banned.

Under the terms of the deal, enterprise software and cloud company Oracle and retailer Walmart would reportedly have a 12.5 per cent and 7.5 per cent respective stake in TikTok Global, which would be an “independent American company”, with headquarters in the US and a public listing on a US stock exchange within 12 months.

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Signage outside Oracle’s Beijing office. Picture: Nicolas Asfouri/AFP

Walmart and Oracle will team up to create TikTok Global. Picture: Robyn Beck/AFP

Beijing-based ByteDance would retain 80 per cent ownership.

According toThe New York Times, Mr Trump previously said he wouldn’t be satisfied with a deal where ByteDance retained a majority stake, but because a number of US-based financiers are heavy investors in the company, the Trump administration can claim TikTok Global would be majority owned by US interests.

“I have given the deal my blessing,” Mr Trump said on Saturday.

“If they get it done that’s great, if they don’t that’s fine too,” he added.

US Secretary of State Mike Pompeo told Fox News: “Whether there’s still some Chinese ownership where they still collect a royalty cheque from the benefits of the business, there will be an American headquarters, it will be controlled by Americans.

“The data, most importantly, the data, the very reason we have gone after TikTok, that data will be in a place that we have confidence that no American will have the risk that their data will end up in the hands of the Chinese Communist Party,” he said.

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TikTok’s California office. Most US tech companies are headquartered in the state of Delaware for tax purposes while having head offices in California. TikTok Global is likely to do the same. Picture: Mario Tama/Getty/AFP

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The deal still needs approval from the Committee on Foreign Investment in the United States (CFIUS) led by US Treasury Secretary Steven Mnuchin.

Mr Trump also said the deal would contain “about a $US5 billion ($A6.95 billion) contribution toward education”.

The next day ByteDance said it was “hearing for the first time” about the multi-billion dollar fund but “has always been committed to investing in the educational sector”.

Walmart and Oracle said in a joint statement that the TikTok Global company they will invest in (and which Walmart CEO Doug McMillon will sit on the board of) will create 25,000 US jobs “over time” and “pay more than $US5 billion in new tax dollars to the US Treasury”.

US President Donald Trump speaks with reporters at the White House on Saturday. Picture: Alex Edelman / AFP

They also said TikTok Global and its investors “will create an educational initiative to develop and deliver an AI-driven online video curriculum to teach children from inner cities to the suburbs, a variety of courses from basic reading and math to science, history and computer engineering”.

Where the money for this “educational initiative” will come from is still somewhat of a mystery: whether it will be an additional investment from TikTok Global, funded by the new tax revenue promised by Oracle and Walmart, or from funds raised when the company lists publicly.

The companies added that the deal will “spark much-needed competition in the market for social networks”, an industry currently dominated by Facebook.

In becoming TikTok’s “trusted tech partner”, Oracle will assume the role of “TikTok’s secure cloud provider”, boosting its market share in the $US111 billion ($A152.2 billion) cloud industry where it’s currently in eighth place with only 2 per cent of the market, according to Synergy Research Group.

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Oracle’s “unique technology eliminates the risk of foreign governments spying on American users or trying to influence them with disinformation,” the companies claimed.

Walmart “will bring its omnichannel retail capabilities including its Walmart.com assortment, e-commerce marketplace, fulfilment, payment and measurement-as-a-service advertising service”.

The deal that will give 20 per cent of TikTok Global to Oracle and Walmart comes after the Trump administration threatened to ban the app, along with others from Chinese companies.

TikTok vowed to fight that order through the courts while China changed its export restrictions that could prevent TikTok Global taking with it the advanced recommendation algorithm which is a key component in the app’s success.

The US is TikTok’s biggest market.

The app doesn’t operate in China and has been banned in India. (Whether that ban lifts following a successful deal remains to be seen.)

Meanwhile, Oracle co-founder, chairman and chief technology officer Larry Ellison riled the company’s employees earlier this year by allegedly failing to “uphold company ethics” by hosting a fundraiser for the re-election of President Trump at a property he owns in Southern California.

More than 9500 people signed a petition voicing their disappointment in the move.