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On Saturday, Trump gave his blessing to a deal that would see Oracle and Walmart take a minority stake in a U.S.-headquartered company called TikTok Global. Oracle would become the secure cloud provider and host American users’ data in the country.
“It’ll be a brand new company. It will have nothing to do with any outside land, any outside country, it will have nothing to do with China,” Trump said.
But in a Chinese-language statement on Monday, ByteDance, the Beijing-based parent company of TikTok, insisted it was not losing control of the social media app.
The company said it plans to carry out a small round of pre-IPO (initial public offering) financing that will give ByteDance an 80% stake in TikTok Global. As part of the deal, Oracle, Walmart and ByteDance agreed to list TikTok Global on an American stock exchange within 12 months.
TikTok faced being shut down on Sunday but that decision has now been delayed for a week, according to the Department of Commerce.
In early August, Trump said that TikTok would be shut down in the U.S. unless an American firm bought it.
“So it’ll close down on Sept. 15 unless Microsoft or somebody else is able to buy it and work out a deal, an appropriate deal, so that the Treasury of the United States gets a lot of money,” Trump said at that time.
However, TikTok is not being acquired and will have the majority stake. But because 40% of ByteDance is owned by U.S. venture capital firms, the Trump administration can technically claim TikTok Global is now majority owned by U.S. money.
Before ByteDance’s Chinese statement on Monday, CNBC reported the company would retain an 80% stake in TikTok Global. U.S. Secretary of State Mike Pompeo said the entity will be “controlled by Americans” in an interview with Fox News’ “Sunday Morning Futures.” He added ByteDance would just be a “passive shareholder.”
“I used to do oil deals all the time. I didn’t have any access to the company’s information. I just got a royalty check, right? That’s the situation — just a passive shareholder who collects money and/or writes a check if the company is not doing well. No access to the company, no decision-making authority, to ability to peer into what they’re doing; just a passive shareholder,” Pompeo said, according to an official transcript.
Trump has also previously said the U.S. Treasury should get a cut of any deal involving TikTok. Oracle and Walmart said in a joint statement on Saturday that the global TikTok business will pay over $5 billion in new taxes to the U.S. Treasury Department.
ByteDance clarified on Monday, however, that this is just a “forecast” of corporate taxes and other taxes that TikTok Global will need to pay for business development over the next few years. The Chinese technology firm added that the tax will need to be determined according to how TikTok Global develops, noting that the $5 billion figure has “nothing to do” with deal with Oracle and Walmart.
Oracle will also get to inspect the source code for TikTok, but ByteDance said it will not be transferring algorithms or technology to the U.S. firm.
Washington claims that TikTok represents a national security threat because it collects U.S. user data which can be accessed by Beijing. TikTok has repeatedly denied this.