Donald Trump has given his “blessing” to ByteDance’s deal with Oracle to keep TikTok operating in the US, after the US president had threatened to ban the Chinese company’s popular video app.
“I have given the deal my blessing, if they get it done 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 of the deal comes after intense negotiations between ByteDance and the Trump administration to address concerns that the Chinese company’s app posed a serious threat to national security. Any deal will also need approval from China.
Under the terms of the agreement approved by Mr Trump, ByteDance will spin-off TikTok’s global business into a new US-headquartered company, which will continue to be majority owned by the Chinese tech group, as first reported by the Financial Times.
Oracle together with US retailer Walmart will own about 20 per cent of the new company, according to people briefed about the matter. Doug McMillon, chief executive of Walmart, is expected to get a seat on TikTok’s board.
Mr Trump had previously requested that ByteDance sell its entire US operations of TikTok. At the time US national security officials argued such a move was the only way to guarantee that China would not try to use backdoors into the app to spy on American citizens.
ByteDance will keep control of the algorithm, which picks which videos to show each user, under the current agreement. However, Mr Trump said that China would have no influence on TikTok.
“It will have nothing to do with China, it’ll be totally secure, that’ll be part of the deal,” Mr Trump said. “All of the control is Walmart and Oracle, two great American companies.”
Larry Ellison, co-founder and chairman of Oracle, is a supporter of Mr Trump and has held at least one fundraiser to help get the president re-elected in 2020.
Oracle’s decision to reach a deal with ByteDance, which was first revealed by the FT, is set to be hugely lucrative for the US tech giant, which is expected to be paid hundreds of million of dollars annually to safely manage the app’s data.
The Chinese company will also donate $5bn to an educational fund, which the US president said would address his earlier promise that ByteDance would pay the US government a fee for the transaction.
“They’re going to be setting up a very large fund,” Mr Trump said. “That’s their contribution that I’ve been asking for.”
Mr Trump said that TikTok will create at least 25,000 jobs, predominantly in the Republican-controlled state of Texas, which would make it one of the largest employers in America among social media companies.
ByteDance had to make a series of concessions to win the US president’s support for its deal with Oracle and Walmart.
TikTok’s board will be composed exclusively of American citizen and it will include a security committee led by a person with government security clearances, said people briefed about the matter.
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 emerged as a candidate to run TikTok. The company has held preliminary talks with Mr Systrom about the chief executive role following the unexpected departure of Kevin Mayer last month.
ByteDance and Oracle could not be immediately reached for comment.