The ban on TikTok downloads in the United States scheduled to start yesterday (September 20) has been averted as progress was made on a deal that will see ownership of the company change hands.
Recall that President Donald Trump had placed a ban on the app over concerns about the security of American users’ data.
As part of the deal rescuing TikTok, US tech company, Oracle, is joining hands with retail giant, Walmart, to form a new entity called TikTok Global, which will be headquartered in the country. The deal will, however, see ByteDance, the app parent company, hold its majority ownership position.
Oracle and Walmart are planning to own a combined 20 per cent of the new TikTok entity, officials at TikTok said. Beijing-based ByteDance is expected to own about 80 per cent of the company, but since 40 per cent of ByteDance is owned by US investors, TikTok Global says it is majority-owned by American investors.
US President Trump has given tentative approval to a deal that will keep TikTok alive in the US, resolving months-long confrontation after months of battle over the risks it poses to the country.
“I have given the deal my blessing,” Mr Trump said. “I approve the deal in concept.”
TikTok, which has over 100 million active monthly users in the United States, is owned by Chinese tech giant ByteDance. For months, the Trump administration has been pushing TikTok to sever its ties to ByteDance.
Officials in the White House and some Democrats in Washington fear China’s authoritarian regime could access Americans’ data through the app and use the information to blackmail or launch disinformation campaigns.
Under the new arrangement, Oracle will host all of TikTok’s U.S. user data and will safeguard the TikTok’s computer systems so as to ensure the country’s national security requirements are fully satisfied.
Analysts say Oracle’s cloud computing business will receive a major boost as a result of the deal. Oracle has been lagging behind competitors, like Amazon, Microsoft and Google for the cloud storage business.
Also, Walmart stands to benefit from the deal by tapping into a vast consumer base of mostly young people who use the app.
Besides being a major investor in the new TikTok company, Walmart said it will bring its e-commerce retail capabilities to the app, which could allow TikTok users to shop on Walmart online store through TikTok.
