TikTok’s Confusing Deal With Oracle, Walmart Raises More Questions After Trump’s Tentative Approval

On Monday, President Donald Trump demanded China give up control of video sharing app TikTok.

But confusion continues to swirl around TikTok two days after Trump approved a deal that would grant Oracle (ORCL) and Walmart (WMT) part ownership of the Chinese-owned TikTok.

On Monday morning, TikTok’s Beijing-based parent, ByteDance said it will still retain ownership of 80% of a new U.S.-based entity called TikTok Global following completion of its strategic arrangement with Oracle and Walmart. Oracle and Walmart together will acquire 20% of the newly formed TikTok Global.

Under terms of that plan, Oracle will serve as the secure cloud provider for the app, while hosting the data of American users in the country – with ByteDance keeping majority control of the company.

However, this would refute Trump’s earlier boasting that China will have no influence on TikTok.

“It’ll be a brand new company,” Trump said on Saturday. “It will have nothing to do with any outside land, any outside country, it will have nothing to do with China.”

Oracle and Walmart also jointly stated on Saturday that TikTok Global will be “majority owned by American investors” and that it will be an “independent American company” with four Americans out of the five-member board of directors.

That statement also appears to contradict ByteDance’s later assertions.

ByteDance also said it plans to conduct an initial public offering for TikTok Global on U.S. stock exchange within 12 months – apparently to provide more transparency for the company.

In August of this year, Trump threatened to ban TikTok in the U.S. unless ByteDance divested its U.S. operations to an American company, citing national security concerns. Front-runner Microsoft (MSFT) eventually yielded to Oracle and Walmart as the app’s U.S. partners.

The Department of Commerce has since postponed a ban on TikTok as this deal becomes ever more complex.

CNBC noted that since ByteDance is itself currently 40%-owned by U.S.-based venture capital firms, Trump can truthfully claim TikTok has heavy U.S. ownership.

U.S. Secretary of State Mike Pompeo also said TikTok will be “controlled by Americans” during a weekend interview with Fox News.

Pompeo further said ByteDance will only be a “passive shareholder” that “collects money and/or writes a check if the company is not doing well. [It will have] no access to the company, no decision-making authority, [no] ability to peer into what they’re doing.”

More confusion arose over the taxes that the new U.S.-based TikTok Global will pay.

Oracle and Walmart said on Saturday that TikTok Global will pay more than $5 billion in new taxes to the U.S. Treasury.

But on Monday, ByteDance described the $5 billion figure as only a “forecast” of the corporate taxes and other taxes that TikTok Global will have to pay for business development over the next few years. ByteDance added that the $5 billion estimate has “nothing to do” with the deal with Oracle and Walmart.

ByteDance also said it will not transfer any of its algorithms or technology to Oracle – again, a contradiction of Oracle’s claim it will be able to inspect TikTok’s source code. Thus, it remains unclear how Oracle might guarantee that data on U.S. users will be protected.

Jonathan Shieber of TechCrunch spelled out his misgivings about the confusing TikTok deal.

“The deal benefits everyone except U.S. consumers and people who have actual security concerns about TikTok’s algorithms and the ways they can be used to influence opinion in the U.S.,” he wrote. “ByteDance gets to maintain ownership of the U.S. entity, Oracle gets a huge new cloud customer to boost its ailing business, Walmart gets access to teens to sell stuff, and U.S. customer data is no safer.”

Shieber also pointed out that TikTok’s Chinese owners “may be pressured by Beijing [government] to manipulate its algorithm to promote or suppress content.”

Companies in China, he noted, are “required to follow the country’s intelligence and cloud security law mandating complete adherence with all government orders for data.”