President Donald Trump said he supported a deal that would see popular video-sharing app TikTok partner with Oracle and Walmart and form a US company.
Trump targeted Chinese-owned TikTok for national security and data privacy concerns in the latest flashpoint in rising tensions between Washington and Beijing, reports AP.
Trump’s support for a deal comes just a day after the Commerce Department announced restrictions that if put in place could eventually make it nearly impossible for TikTok's legions of younger fans to use the app.
Trump said if completed, the deal would create a new company likely to be based in Texas.
“I have given the deal my blessing,” he said. “If they get it done, that’s great. If they don’t, that’s OK too.”
Trump said the new company will be hiring at least 25,000 people and making a $5 billion contribution to a fund dedicated to education for Americans. “That’s their contribution that I’ve been asking for,” he said.
TikTok said Oracle and Walmart could acquire up to a cumulative 20 percent stake in the new company in a financing round to be held before an initial public offering of stock, which Walmart said could happen within the next year. Oracle's stake would be 12.5 percent, and Walmart's would be 7.5 percent, the companies said in separate statements.
The deal will make Oracle responsible for hosting all TikTok's US user data and securing computer systems to ensure US national security requirements are satisfied. Walmart said it will provide its ecommerce, fulfillment, payments and other services to the new company.
“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,” TikTok said in a statement.
Trump has been demanding that the US operations of TikTok be sold to a US company or else be shut down. He's also been targeting WeChat, another Chinese-owned app.
The administration contends that the user data collected by the two apps could be shared with the Chinese government. On Saturday, Trump said the US-based TikTok “will have nothing to do with China.” TikTok says it has 100 million US users.
On Friday, the US Commerce Department said it would bar TikTok from US app stores as of late Sunday. Further restrictions that would prevent TikTok from accessing essential internet services in the country would go into effect on Nov 12. Commerce said Saturday that it will delay the barring of TikTok from US app stores until Sept 27 at 11:59pm.
Commerce is imposing similar restrictions on WeChat, although all of the restrictions on that app are set to go into effect Sunday night at 11:59pm.
WeChat has millions of US users who rely on the app to stay in touch and conduct business with people and companies in China and around the world.
The Trump administration's aggressive tactics are part of its latest attempt to counter the influence of China. Since taking office in 2017, Trump has waged a trade war with China, blocked mergers involving Chinese companies and stifled the business of Chinese firms like Huawei, a maker of phones and telecom equipment.
The US Treasury Department said Saturday that TikTok's deal still needs to close with Oracle and Walmart, and it also needs documentation and conditions to be approved by the Committee on Foreign Investment in the United States.