Oracle and Walmart Make Preliminary Deal to Achieve Majority American Ownership of TikTok


Courtesy of CNBC

CEO of Walmart, Doug McMillan, helps lead the dealmaking with TikTok.

Sarah Sweeney, Staff Writer

As if 2020 has not been strange enough, the popular comedic video-sharing app TikTok is now one of the most heated sources of political tension in the U.S., worsening the strained relationship between the U.S. and China.

TikTok is a fast-paced and entertaining video-sharing social media app, which is currently  Apple’s most downloaded application. Created in 2016 by Chinese technology company ByteDance, TikTok has more than 800 million active users, over 40% of which are between 16 and 24 years old. It is estimated that 90% of all TikTok users access the app on a daily basis, spending an average of 52 minutes on it each day. 

Part of what makes TikTok so addicting, and therefore successful, is its “For You Page,” the landing screen when users open the app. Facilitated by a powerful algorithm, the “For You Page” provides users with videos tailored to their interests based on their previous interactions with TikTok videos. The algorithm collects and analyzes data so well that users often find videos related to their geographic location, gender, sexuality and other personal demographic information.  

This collection of personal data has alarmed some, including President Donald Trump, who threatened to ban TikTok in late July. His executive order, issued on Aug. 6, cited numerous security concerns. 

“[TikTok’s] data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information — potentially allowing China to track the locations of Federal employees and contractors, build dossiers of personal information for blackmail and conduct corporate espionage,” Trump said.

Trump later agreed to forgo this outright ban if TikTok could divest its U.S. operations, meaning transition to a majority American ownership, by Sept. 20. Immediately, three main potential buyers came to the forefront: Microsoft, Oracle and Walmart. After an exhaustive bidding process, a tentative deal has emerged: Oracle and Walmart will both invest in TikTok Global, Oracle with a 12.5% stake and Walmart with a 7.5% stake. Although ByteDance would retain an 80% stake in TikTok, about 40% of ByteDance is owned by American investors. This, combined with Oracle and Walmart’s new investment, would provide a majority American ownership of TikTok. 

However, the deal is far from over. There is a large confusion over ownership breakdown, with a spokesperson for ByteDance claiming it would directly hold an 80% share of TikTok Global, and Oracle stating that ByteDance will have no ownership in TikTok Global. The deal is also awaiting approval from the Chinese government, which recently expanded trade restrictions to restrict the export of content-recommendation algorithms, like the one that powers TikTok’s “For You Page.” Under the preliminary agreement with Oracle and Walmart, the algorithm would not be part of the sale, although they would be allowed to review the application’s source code. 

Although President Trump extended the deadline for the proposed Sept. 20 ban, the threat of one still remains. The White House hinted at a download ban beginning on Sunday, Sept. 27. However, this was not confirmed. The Commerce Department also hoisted Nov. 12 as a proposed date for a complete ban if a deal achieving majority American ownership is not reached before then. 

This uncertainty about whether TikTok will be banned or not has left many wanting to ask the United States government a Doja Cat lyric and popular TikTok sound – Why Don’t You Say So?