Saturday, October 31, 2020
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Trump agrees to Oracle deal for TikTok in US

Trump agrees to Oracle deal for TikTok in US
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Donald Trump has given his “blessing” to ByteDance’s deal with Oracle to keep TikTok operating in the US, after the US president had threatened to ban the Chinese company’s popular video app.

“I have given the deal my blessing, if they get it done that’s great, if they don’t that’s fine too,” the US president told reporters on Saturday. “I approved the deal in concept.”

The US president’s backing of the deal comes after intense negotiations between ByteDance and the Trump administration to address concerns that the Chinese company’s app posed a serious threat to national security. Any deal will also need approval from China.

The US commerce department on Saturday said it would delay to September 27 an order to remove TikTok from Apple and Google’s app stores following Mr Trump’s backing of the deal. The move gives the companies more time to finalise the details following the tentative approval on Saturday.

Under the terms of the agreement, ByteDance will spin-off TikTok’s global business into a new US-headquartered company, which will continue to be majority owned by the Chinese tech group, as first reported by the Financial Times.

Oracle together with US retailer Walmart will take a stake of up to 20 per cent of the new company pre-IPO, according to TikTok.

Mr Trump had previously requested that ByteDance sell its entire US operations of TikTok. At the time US national security officials argued such a move was the only way to guarantee that China would not try to use backdoors into the app to spy on American citizens.

Under the deal, ByteDance will keep control of the algorithm, which picks which videos to show each user, under the current agreement. However, Mr Trump said that China would have no influence on TikTok.

“It will have nothing to do with China, it’ll be totally secure, that’ll be part of the deal,” Mr Trump said. “The security will be 100 per cent. They’ll be using separate clouds and a lot of very, very powerful security.”

“All of the control is Walmart and Oracle, two great American companies,” Mr Trump added.

Larry Ellison, co-founder and chairman of Oracle, is a supporter of Mr Trump and has held at least one fundraiser to help get the president re-elected in 2020. Doug McMillon, chief executive of Walmart, is expected to get a seat on TikTok’s board.

Oracle’s decision to reach a deal with ByteDance, which was first revealed by the FT, is set to be hugely lucrative for the US tech giant, which is expected to be paid hundreds of million of dollars annually to safely manage the app’s data.

“As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global,” said Oracle chief executive Safra Catz, who was in Mr Trump’s 2016 transition team.

“Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. We are a hundred per cent 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. 

The Chinese company will also donate $5bn to an educational fund, which the US president said would address his earlier promise that ByteDance would pay the US government a fee for the transaction. “They are going to pay $5bn into a fund for education so we can educate people as to the real history of our country,” the president said at a campaign rally in North Carolina on Saturday night. 

Mr Trump said that TikTok will create at least 25,000 jobs, predominantly in the Republican-controlled state of Texas, which would make it one of the largest employers in America among social media companies.

“A lot of jobs, a lot of money for our country. Billions of dollars of taxes will be paid every year. Hundreds of millions of users, and they’ll be happy,” said Mr Trump.

ByteDance had to make a series of concessions to win the US president’s support for its deal with Oracle and Walmart.

TikTok’s board will be composed exclusively of American citizen and it will include a security committee led by a person with government security clearances, said people briefed about the matter.

The US administration would have to approve both the board members and the head of the security committee.

Kevin Systrom, the founder of Instagram, has emerged as a candidate to run TikTok. The company has held preliminary talks with Mr Systrom about the chief executive role following the unexpected departure of Kevin Mayer last month.

“We are pleased 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,” said ByteDance in a statement.

additional reporting by Kiran Stacey in Washington



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