It was banned. Until it wasn’t.
For a brief moment there, it looked like TikTok’s days in the U.S. were numbered. Then, President Trump gave his blessing to an 11th hour tripartite agreement.
And now it appears as though TikTok is here to stay.
Here’s what we know about the deal.
A Joint Venture Between Oracle and Walmart
It’s not too often that you read about Walmart getting into high-tech. But here we are.
Oracle and Walmart both agreed to take control of TikTok U.S. operations. The companies presented the parameters of the deal to Washington, and the nation’s chief executive gave it his blessing.
“I approved the deal in concept,” the president said Saturday outside of the White House. “If they get it done, that’s great. If they don’t, that’s OK too.”
If they don’t get it done, then TikTok is formally banned in the U.S. as of September 27.
According to the agreement, Oracle will buy a 12.5% stake in ByteDance, the parent company of TikTok. Walmart will snag a 7.5% share.
The deal also calls for the creation of a new company: TikTok Global. In spite of its name, that’s a U.S.-based company.
TikTok said that it’s “pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the U.S. administration and settle questions around TikTok’s future in the U.S.”
— TikTok_Comms (@tiktok_comms) September 19, 2020
Yes, security concerns. The threat to ban TikTok was all about national security.
ByteDance is a Chinese company. And the Chinese government is known to control its companies.
Some folks in the administration raised concerns that China might gain access to user data and exploit it for some kind of nefarious purposes.
It’s not just Americans who raised that concern, though. India banned the app a while ago.
Who controls the new company created as part of this deal? Well, not China.
U.S. Secretary of State Mike Pompeo said that ByteDance will get “no decision-making authority” and “no ability to peer into” whatever the U.S. company is doing. He also said that the company will take on the role of a “passive shareholder.”
Further, all U.S. user data will be hosted by Oracle.
Walmart CEO Doug McMillon will serve on the new company’s board. Three of the other four seats on the board will be filled by American citizens.
The new company will be headquartered in Texas where it’s expected to create thousands of American jobs.
The president didn’t just want to prevent the Chinese government from spying on Americans. He also wanted the U.S. government to get some cash from the transaction.
Art of the deal, and all that.
He got his wish. TikTok Global will funnel $5 billion to a new education fund.
The specifics of the education fund aren’t clear at this time.
Where We Stand Now
If the ban had remained in place, both Apple and Google would have pulled the TikTok app from their respective stores by now.
As it stands, they’ve got another week before they have to worry about that.
If, for some reason, this deal falls apart in the next few days, the ban could go into effect after all.
But it looks like everything is headed in the right direction.