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Trump accepts Oracle-Walmart deal: NPR

US President Donald Trump speaks to members of the media before boarding Marine One on the White House’s South Lawn in July.

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Bloomberg / Bloomberg via Getty Images

US President Donald Trump speaks to members of the media before boarding Marine One on the South Lawn of the White House in July.

Bloomberg / Bloomberg via Getty Images

Updated at 12:55 PM ET

President Trump has given tentative approval to a deal that will keep TikTok alive in the United States, settling a month-long confrontation between a successful app popularized by teen lip-syncing and White House officials who considered the service a national security risk.

TikTok downloads were supposed to be banned in the US starting at midnight on Sunday, but has now been avoided.

“I gave the deal my blessing,” Trump said. “I approve of the agreement in the concept.”

Under the deal to bail out TikTok, US tech firm Oracle is teaming up with Walmart to form a new entity called TikTok Global, which will be based in the US.

The deal appears to satisfy White House concerns about the security of American user data, although ByteDance is expected to maintain its majority position.

With ties to ByteDance remaining, some tech privacy experts were skeptical that the deal would significantly resolve the national security concerns that first launched Washington’s takeover of TikTok.

“Interactions with the Chinese government and the Chinese government’s ability to put pressure on the ByteDance company are still substantial,” said Chris Kelly, Facebook’s former privacy officer.

“It won’t be strange to have an interaction between the two companies on a number of different issues, including algorithmic operations, so that they can extend to personal data quite easily,” he said in an interview.

TikTok, which has approximately 100 million monthly active users in the United States, is owned by Chinese tech giant ByteDance. For months, the Trump administration has been pushing TikTok to sever its ties with ByteDance. White House officials and some Democrats in Washington fear that the authoritarian Chinese regime could access American data through the app and use the information to blackmail or launch disinformation campaigns.

Under the new agreement, Oracle will host all US TikTok user data and safeguard TikTok’s computer systems “to ensure that US national security requirements are fully met,” TikTok said in a statement.

“While we strongly disagree with the implications of TikTok as a threat to national security, we still understand the concerns,” Vanessa Pappas, interim manager of TikTok, wrote in a statement. “We are delighted to have confirmed today a proposal that solves the administration’s security problems and solves questions about the future of TikTok in the United States.”

Analysts say Oracle’s cloud computing business will receive a significant boost as a result of the deal. Oracle lagged behind competitors such as Amazon, Microsoft and Google for cloud storage businesses. Oracle executives have close ties to President Trump.

“We are 100 percent confident in our ability to provide a highly secure environment for TikTok and ensure data privacy for US TikTok users and users around the world,” said Safra Catz, CEO of Oracle, who did part of Trump’s transition team in 2016.

Oracle CEO Larry Ellison is among the few technology leaders in Silicon Valley to support the president. In February, Ellison organized a fundraiser for Trump at his estate in Rancho Mirage, California, just south of Palm Springs.

In addition to being a major investor in the new TikTok company, Walmart said it will bring its e-commerce “retail capabilities” to the app, which could allow TikTok users to shop on the Walmart online store via the app. ‘app.

A major sticking point in the negotiations centered on how much interest Beijing-based ByteDance would have in the US operation of TikTok, as Washington officials feared that any ByteDance ownership could give the Chinese company a backdoor to access American data.

Oracle and Walmart are planning to own a combined 20% of the new TikTok entity, TikTok officials said.

ByteDance, based in Beijing, is expected to own about 80% of the company, but since 40% of ByteDance is owned by US investors, TikTok Global says it is owned by the majority of American investors, according to one person is familiar with the arrangement.

TikTok expects to raise funds ahead of a planned initial public offering on the stock market in less than a year.

However, ByteDance which owns 80% of TikTok does not appear to meet the recommendation of the U.S. Foreign Investment Committee, known as CFIUS, a Treasury-led panel that examines U.S. business transactions with overseas ties.

Trump signed an order in August that required ByteDance to fully divest its US operations TikTok by November 12. The fate of that order is dark.

“They are really moving the stakes here,” said a former CFIUS official, who asked not to be appointed for fear of administration retaliation. “ByteDance is still the biggest dog in this deal. The foreign control issue doesn’t go away here.”

Four of the five members of TikTok Global’s board of directors will be American, according to a joint statement from Oracle and Walmart. Among the four members of the US board is Walmart CEO Doug McMillon.

Oracle and Walmart officials say TikTok Global will create more than 25,000 new jobs and pay $ 5 billion in taxes to the Treasury.

Additionally, TikTok Global said it will develop an AI-driven educational curriculum to teach children basic reading, history, and other subjects. It has been a few days since Trump has declared that he is creating a commission to promote “patriotic education” to counter the teaching of American slavery and racism in the classroom.

Treasury officials say the deal has yet to be finalized by Oracle and Walmart. CFIUS will also have to sign the agreement.

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