President Donald Trump has accepted an arrangement for Oracle and Walmart to purchase shareholdings in the US activities of the famous TikTok video app, postponing a proposed ban scheduled to come into force on Sunday.
Oracle will own 12.5 per cent of TikTok’s global company, headquartered in the US, and have secure cloud services that resolve national security issues regarding the Chinese-owned software. Retail giant Walmart is now likely to take a share.
“Both companies will invest in the TikTok Global pre-IPO funding round, in which they will take up to a combined 20% stake in the venture,” TikTok said in a statement. “We will also maintain and expand TikTok Global ‘s U.S. headquarters while providing 25.000 jobs across the country.”
Oracle and Walmart announced the arrangement in separate remarks.
The agreement, which still requires the approval of the Chinese Government, came just hours before the ban on new TikTok downloads was put in place. Trade Secretary Wilbur Ross said Saturday that the ban would be pushed to 11:59 p.m. on Sept. 27. The deal is finalized.
The deal follows a turbulent time for TikTok, which Trump called a national security threat because it is owned by ByteDance, a Chinese tech firm. The administration alleges that the Chinese government might use the data obtained by the TikTok app to “watch the movements of federal employees and contractors, create files on personal information for ransom, and run corporate espionage.” TikTok consistently fought back, noting that it would not send data to the Chinese government even if it were requested to do so.
The administration released two executive orders pertaining to TikTok. An order of August 6 would have barred all US dealings with ByteDance which would have been expected to come into force on Sunday. A separate executive order, issued on 14 August, ordered ByteDance to sell its US operations by 12 November.
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Intelligence services have decided that the Chinese authorities will gather data through TikTok, but there is no proof that they have done so, according to The New York Times. The Wall Street Journal finds that the TikTok app for Android had surreptitiously obtained user identifiers such as MAC addresses. The activity was over in November.
On his way to the North Carolina campaign rally, Trump told reporters that he had given “my blessing” to the TikTok-Oracle deal, Bloomberg said. The news service confirmed that Oracle will have “complete access” to the TikTok source code and will be able to upgrade it to ensure that there is no back door. Chinese officials have indicated that the government is willing to approve the agreement as long as ByteDance does not have to give up the artificial intelligence algorithms behind the app, Bloomberg said.
Trump’s high-profile attacks on TikTok and ByteDance have already taken their toll on the service, which is estimated to have 100 million users in the US. TikTok CEO Kevin Mayer, a former Disney executive, resigned at the end of August after just three months in office. In a letter, he told employees that the position he signed up to looks different due to pressure from the US administration on ByteDance to sell its US business. Vanessa Pappas, Chief Executive Officer of TikTok in the United States, is the acting president of TikTok.
Two cases have been launched against Trump’s executive orders. On 24 August, TikTok and ByteDance sued Trump and Ross, arguing that the administration had breached the Fifth Amendment’s due process clause because the corporation had not been offered a chance to be heard. The lawsuit also alleges that the President has acted beyond his legal authority because his administration has not shown that TikTok poses a threat to national security. The President’s order extends Trump’s “anti-China hysteria strategy in the run-up to the US presidency,” the complaint claims. It is not clear what will happen to the litigation now that the resolution has been accepted. The White House did not respond directly to a request for comments.
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In a separate lawsuit filed on the same day, Patrick Ryan, an employee of TikTok, claimed that the actions of the administration could prevent the company from paying 1,500 US workers. Later, the Department of Justice said that employees could continue to be paid.
The US is not the only country to target TikTok and Chinese apps. India, along with WeChat and dozens of other Chinese apps, banned TikTok at the end of June citing national security concerns. The ban came after 20 Indian soldiers were killed in a clash with Chinese soldiers along the disputed Himalayan border.
TikTok is known for its quirky videos of lip-syncing and dancing people in clips that run between 15 seconds and 1 minute. But it has also become a hub for political talk ahead of the US presidential election. The app has logged more than 2 billion downloads as of April. TikTok had 689 million monthly active users worldwide as of July and was available in more than 200 countries. Uncertainty about TikTok ‘s future caused some US users to direct their fans to their Instagram and YouTube pages. Facebook, which is infamous for copying its rivals, launched a TikTok competitor called Reels on Instagram in early August.
ByteDance acquired Musical.ly for about $1 billion in 2017 and the app, popular among US teenagers, was rebranded as TikTok.
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