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TIKTOK GLOBAL LACKS KEY TECH

While Oracle and Walmart will get minority stakes in the new U.S. operations for TikTok, China’s ByteDance will not be transferring any of its algorithms or technologies to Oracle.

TikTok parent ByteDance said Oracle can instead check the source code.

In a statement Monday, ByteDance confirmed that it would do a small round of pre-IPO financing. TikTok Global will become an 80% holding subsidiary of ByteDance, which gives it majority control although U.S. venture capital firms own 40% of the company. ByteDance, Oracle and Walmart will work toward a public listing in the U.S. within a year. 

In the announcement of the deal that President Trump OK’d on Saturday, TikTok said the new U.S. operation will result in the creation of 25,000 jobs. Oracle will become TikTok’s secure cloud provider and host U.S. user data.

Oracle CEO Safra Catz said, "Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok's American users, and users throughout the world. This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders."

Walmart plans to take a 7.5% stake in the new company, and Walmart CEO Doug McMillon would serve on its five-member board.

According to a Wall Street Journal report, U.S. companies or investors would own 53% of TikTok Global. After an IPO, ByteDance’s stake in TikTok could drop to the 31% range.

Eswar Prasad, an economics professor at Cornell University and the former head of the International Monetary Fund’s China division, told the Journal,  “The TikTok deal allows Trump to claim victory and portray it as a validation of his tough, take-no-prisoners approach in dealing with China, even if the final deal represents a compromise relative to the administration’s initial set of demands.”

 

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