The complex wrangling over what happens next to TikTok — which has become a geopolitical football punted around by the Trump administration — continues apace.
As a separate entity TikTok, the popular short-form video app, would file for an initial public offering on a U.S. stock exchange within a year after majority control is transferred from China’s ByteDance to U.S.-based interests, including Oracle and potentially Walmart, the Wall Street Journal reported. That, according to reports, would be a precondition for U.S. approval of any deal. Earlier this week Oracle confirmed it had reached a deal to be the “trusted technology provider” in the U.S. for TikTok. Under the agreement, Oracle — led by pro-Trump chairman Larry Ellison — would receive a reported 20% equity stake in the company.
In addition, TikTok is looking for a new CEO to run the business once it’s split from parent ByteDance. Among those who have held talks with TikTok about the role is Kevin Systrom, co-founder of Instagram, who stepped down as CEO two years ago, per a New York Times report.
TikTok is currently headed on an interim basis by Vanessa Pappas, previously GM for North America, Australia and New Zealand. She stepped into the role after ex-CEO Kevin Mayer last month said he would resign just over three months after leaving his high-ranking post at Disney, citing the current political climate surrounding TikTok amid growing tensions in China-U.S. relations.
The U.S. Treasury Department issued a set of technical security conditions to ByteDance regarding the Oracle deal for TikTok, designed to prevent data on U.S. users from being obtained by China, and ByteDance agreed to those, as first reported by Bloomberg. Among those conditions is a stipulation that TikTok’s board of directors comprise only U.S. citizens and include a “national security committee,” according to the Bloomberg report.
President Trump is expected to decide on the proposed deal terms for TikTok’s U.S. business in the next 24-36 hours, CNBC reported.
TikTok, Oracle and Walmart did not comment on the reports.
The Trump administration ordered ByteDance to divest TikTok U.S. assets, citing national security concerns, setting a deadline of Sept. 20 for completing a transaction. According to reports, current U.S.-based ByteDance investors, including venture-capital firms General Atlantic and Sequoia Capital, will receive ownership stakes in TikTok under the proposed deal involving Oracle and possibly Walmart — and that could alleviate Trump administration concerns that TikTok would remain under the control of a Chinese company.
Meanwhile, TikTok has sued Trump and his administration, seeking a ruling blocking the enforcement of the order once the Commerce Department issues its regulations. Trump’s order is “not based on a bona fide national emergency and authorizes the prohibition of activities that have not been found to pose ‘an unusual and extraordinary threat,’” as required under U.S. law, TikTok alleged in the federal lawsuit. However, it appears the litigation will not have any immediate bearing on the TikTok deal on the table.
Last month, China’s government adopted new export restrictions on companies operating in the country covering AI technologies, such as the algorithms used by TikTok. Chinese authorities must also approve any deal ByteDance cuts with Oracle and others to transfer control of TikTok, per the Journal, adding another potential complication.
Trump had previously insisted, repeatedly, that the U.S. government get some sort of substantial payment from any deal for TikTok. However, on Wednesday, the president told reporters that he had been informed that this was illegal. “Amazingly, I find that you’re not allowed to do that,” Trump said.
TikTok had 53.5 million weekly active users in the U.S. for the week of Aug. 30-Sept. 5, 2020, per research firm App Annie. Recently, Facebook’s Instagram launched a TikTok copycat for short-form videos, called Reels. This week YouTube announced the rollout of a beta test of a feature called Shorts — which also closely mimics the TikTok app — in India (where TikTok is currently banned).