Business news

Trump agrees to Oracle deal for TikTok in US


Donald Trump gave his “blessing” to ByteDance’s deal with Oracle to keep TikTok in the United States, after the US president threatened to ban the Chinese company’s popular video app.

“I have given my blessing to the deal, if they do, 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 for the deal comes after intense negotiations between ByteDance and the Trump administration to address concerns that Chinese society’s enforcement posed a serious threat to national security. Any deal will also need to be approved by China.

Under the deal Mr. Trump approved, ByteDance will split TikTok’s global business into a new US-based company, which will continue to be majority-owned by the Chinese tech group, as first reported by the Financial Times.

Oracle and U.S. retailer Walmart will own around 20% of the new company, people briefed on the matter said. Walmart CEO Doug McMillon is expected to secure a seat on the TikTok board.

Mr. Trump had previously asked ByteDance to sell all of its U.S. operations to TikTok. At the time, U.S. national security officials argued that such a move was the only way to ensure that China wouldn’t try to use backdoors in the app to spy on U.S. citizens.

ByteDance will remain in control of the algorithm, which chooses which videos to show each user, under the current contract. However, Mr. Trump said China would have no influence on TikTok.

“It will have nothing to do with China, it will be totally secure, it will be part of the deal,” Mr. Trump said. “All the control is Walmart and Oracle, two big American companies.”

Larry Ellison, co-founder and chairman of Oracle, is a supporter of Mr. Trump and has organized at least one fundraiser to help get the president reelected in 2020.

Oracle’s decision to enter into an agreement with ByteDance, which was first revealed by the FT, is expected to be hugely lucrative for the US tech giant, which is expected to be paid hundreds of millions of dollars a year to securely manage app data.

The Chinese company will also donate $ 5 billion to an education fund, which the US president said would fulfill his earlier promise that ByteDance would pay the US government fees for the transaction.

“They are going to create a really big fund,” Mr. Trump said. “It was their contribution that I asked for.”

Mr Trump said TikTok will create at least 25,000 jobs, mostly in the Republican-controlled state of Texas, making it one of America’s largest employers among social media companies.

ByteDance had to make a series of concessions to gain the support of the US president for his deal with Oracle and Walmart.

TikTok’s board will be made up entirely of U.S. citizens and will include a security committee headed by someone with government security clearances, people briefed on the matter said.

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 established himself as a candidate to lead TikTok. The company had preliminary discussions with Mr. Systrom on the role of managing director following the unexpected departure of Kevin Mayer last month.

ByteDance and Oracle could not be reached immediately for comment.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *