ByteDance, the parent company of TikTok, will keep a majority share under a proposed deal with Oracle for the short-form video app.
According to a person familiar with the deal, the proposed deal between ByteDance and Oracle will enable the Chinese tech firm to retain a majority share in TikTok. The deal will still need approval from the US government.
ByteDance and Oracle's TikTok US deal
The deal was announced several days ago with Oracle confirming that Bytedance has formally proposed a partnership over the US operations of TikTok.
The person said that if the deal gets approved, TikTok would become a global company with headquarters in the US while its user data will be hosted and its code will be reviewed for security by Oracle.
Additionally, Walmart may still be part of the deal as a minority stakeholder and e-commerce partner but there is still no final decision on the matter.
Under the proposed deal, members of TikTok's board will have to be approved by the US government. One board member should be a data security expert and will hold a top-secret security clearance.
The same board member will also serve as the chairperson of security committee whose members would be US citizens individually approved by the US government.
The source also said that the new TikTok global company is expected to file for an initial public offering (IPO) in about 12 months.
The person also said the deal's structure is the product of a revised term sheet sent by the US government to ByteDance and Oracle late Wednesday. Both firms accepted the revised terms.
Expected resistance from President Trump
Last month, President Trump expressed that he welcomes the idea of Oracle buying out the US operations of Chinese-owned video sharing platform TikTok.
Oracle chairman Larry Ellison is a known supporter of Trump who hosted a fundraising event for his campaign in February at his private golf course and estate in California.
However, during a White House press briefing on Wednesday, President Donald Trump said he was “not going to be happy” if the deal for video sharing app TikTok would leave Chinese firm ByteDance as its majority owner.
According to Trump, he has not seen the details of the deal but he would “conceptually” be opposed to allowing ByteDance to retain a controlling share of TikTok.
The US president said: “Conceptually, I can tell you I don’t like that,” he said. “If that’s the case, I’m not going to be happy with that.” He mentioned that he expects a briefing about the deal on Thursday.
Trump argued: “It has to be 100% as far as national security is concerned, and no, I’m not prepared to sign off on anything. I have to see the deal.”
He was also surprised that government may not legally demand a payment from the involved firms in exchange for the approval of the deal.
“Amazingly, I find that you’re not allowed to do that,” he said. “What kind of a thing is this? … I said, ‘No, I want a big chunk of that money to go to the United States government because we made it possible,’ and the lawyers come back to me and say there’s no way of doing that,” he said.
