Washington: President Donald Trump said Saturday he had approved a deal allowing Silicon Valley giant Oracle to become the data partner for TikTok to avert a shutdown of the massively popular Chinese-owned video app that Washington has called a security risk.
The deal, announced by the companies, also includes Walmart as a commercial partner and would create a new US company named TikTok Global.
“I think it’s going to be a fantastic deal,” Trump said. “I have given the deal my blessing. If they get it done that’s great, if they don’t that’s okay too.”
Shortly after, TikTok—owned by China’s ByteDance—confirmed the agreement, which came with companies racing against a Sunday deadline set by Trump’s administration after which new downloads of the app would be banned.
Oracle could buy a 12.5 percent stake in TikTok before a future IPO, and Walmart a 7.5 percent stake.
According to a source close to the matter, ByteDance would keep the rest of the shares. But since the Chinese company is 40 percent owned by American investors, TikTok would eventually be majority American-owned.
“We are pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the US Administration and settle questions around TikTok’s future in the US,” a spokeswoman for TikTok told AFP.
ByteDance also confirmed the deal on social media, saying the three companies would reach an agreement that was “in line with US and Chinese law” as soon as possible.
If it comes to fruition, the deal could mark the de-escalation of a technology battle between Washington and Beijing.
It could also allow Americans to continue using the wildly popular app: the US Department of Commerce announced it was postponing the ban on TikTok downloads until September 27, citing “recent positive developments.”
Trump said the “security will be 100 percent” and that the companies would use separate cloud servers.
The deal will lead to the creation of a new company, headquartered in Texas, which will have “nothing to do with China” but will still be called TikTok, according to the president.
Oracle will be in charge of hosting all US user data and the security of the associated computer systems, while Walmart will supply its online sales, order management and payment services.
In a joint statement, Oracle and Walmart said TikTok Global would “pay more than 5 billion in new tax dollars to the US Treasury,” while they and the other companies involved in the deal would launch an initiative to develop online education.
According to the US Treasury, the TikTok deal still needs to be finalised by the involved companies and approved by a federal national security committee.