WASHINGTON – A deal designed to address the Trump administration’s concerns about TikTok’s relationship with China was broken on Monday by a disagreement over whether a U.S. company would control the social media app and the president’s threat to blocking an agreement that leaves the service in the hands of a Chinese company makes it difficult.
On Saturday, Mr Trump said he had in view of his “blessing” on a transaction he said non-Chinese investors, including Oracle and Walmart, own TikTok.
But ByteDance, the Chinese owner of TikTok, threw cold water on this structure on Sunday, denying both Oracle and Mr. Trump’s characterization of the deal. ByteDance said it will hold a controlling stake in the new company until it goes public next year. Oracle announced Monday that once the new company TikTok Global was formed, ByteDance would lose its stake in the service.
When asked during a television appearance on Fox & Friends on Monday about the potential that ByteDance would still own 80 percent of the service, Trump said the Chinese company “would have nothing to do with it, and if so, we will Just don’t make the deal. “
Mr Trump said Oracle would be in control of TikTok, adding, “If we find they don’t have full control, we won’t approve the deal.”
The back and forth underscores how fluid the transaction remains and the risk that TikTok still fails to address the government’s national security concerns. On Saturday, the trading department postponed a schedule for a week prohibit TikTok from US app stores while the government was reviewing the transaction. If the deal doesn’t address Mr Trump’s concerns, new downloads from TikTok could be banned in the U.S.
China could also undo the deal that has become the latest front in a larger US or China internet control battle.
A spokesman for TikTok said Sunday that ByteDance would hold 80 percent of the new company until a scheduled public offering for the service on the US exchange would take place in about a year. Oracle and Walmart would hold a 20 percent stake, the spokesman said. ByteDance reiterated this characterization in a statement posted online in China on Sunday, which said the deal did not involve a transfer of TikTok’s valuable algorithm – a detail that is likely fuel the administration’s national security concerns.
Oracle contested part of TikTok’s description of the deal. On Monday, a senior executive with the company, Ken Glueck, said in a statement that Oracle / Walmart will be making their investment after founding TikTok Global and distributing TikTok Global shares to their owners, Americans will be the majority and ByteDance will not own any Have TikTok Global. “
As part of the proposed deal, ByteDance’s stake in the newly created TikTok Global would be distributed to the company’s current supporters, including prominent American investors. As a result, the transaction would ultimately result in the app being majority owned by American investors, according to someone with knowledge of the conversations. Zhang Yiming, ByteDance’s founder and major shareholder of his company, would keep a significant stake in TikTok.
This change of ownership would be completed by the time TikTok is scheduled to be listed on an American exchange, which is scheduled to take place within 12 months. The parties have tried to allay control concerns by telling Trump administration officials that the switch would take place at some point, one person with knowledge of the talks said.
The new deal could also run counter to Chinese officials who have raised concerns about handing over one of their most successful technology exports to the United States.
On Monday, Hu Xijin, editor of the state-run Chinese publication Global Times, posted on Twitter that the deal could be rejected by Beijing. “To the best of my knowledge, Beijing will not approve the current agreement between ByteDance, the parent company of TikTok, and Oracle, Walmart, because the agreement would endanger China’s national security, interests and dignity,” Hu wrote.
The Chinese government new regulations published Over the past month, TikTok appeared to have found it difficult to sell its core technology without a license, increasing the prospect of Beijing blocking a business. However, according to ByteDance, the deal would not include the sale of TikTok’s valuable algorithm. Instead, Oracle could only monitor the source code for security reasons.
In the proposed deal, the TikTok board of directors would largely consist of the existing Directors of ByteDance, according to the person with knowledge of the talks. Four of the five members of the board of directors were American, said those familiar with the matter.
The only non-American director would be Mr. Zhang from ByteDance. Douglas McMillon, Walmart’s chief executive officer, would join the board, as would representatives of three ByteDance investors: William Ford of General Atlantic investment firm; Arthur Dantchik of Susquehanna Financial; and Douglas Leone from Sequoia.