President Donald Trump averted a ban on downloads and upgrades for American users of TikTok that was scheduled to go into effect on Sunday, saying he has given his “blessing” to a tentative deal in which US companies Oracle and Walmart will acquire a minority stake in the Chinese video-sharing app.
“I can say that I have given the deal my blessing,” Trump told reporters announcing the deal, adding that he had “approved the deal in concept”.
Oracle and Walmart will acquire 12.5% and 7.5% respectively in a new company, which will be incorporated possibly in Texas and will be called TikTok Global. ByteDance, the Chinese parent company will continue, to hold a stake in the new entity.
But Oracle and Walmart said in a joint statement that the new entity will be majority-owned by American investors. Four American companies already own 60% of ByteDance.
TikTok Global will be an independent American company, headquartered in the US, with four Americans out of the five-member Board of Directors, the companies added in their statement.
The new entity will create more than 25,000 new jobs in the US and will pay more than $5 billion in new tax dollars to the US treasury, which, Trump said, will go towards funding education.
“We’re going to be setting up a very large fund toward the education of American youth.”
TikTok said it was “pleased” to confirm a deal had been reached to resolve the Trump administration’s “security concerns and settles questions around TikTok’s future in the US.”
TikTok faced a ban on new downloads and upgrades for American users from Sunday night, along with WeChat, another Chinese social media app. The restriction on TikTok were extended by the commerce department, but the ban on downloads of WeChat and financial transactions will go into effect as scheduled.
The Trump administration has said these Chinese companies pose a national security threat for the US.
It argued that the Chinese government has access to data collected on American users and could use them to potentially “track the locations of federal employees and contractors, build dossiers of personal information for blackmail, and conduct corporate espionage”.
With the new entity, data on Americans will be stored locally.
“All the TikTok technology will be in possession of TikTok Global, and comply with US laws and privacy regulations. Data privacy for 100 million American TikTok users will be quickly established by moving all American data to Oracle’s Generation 2 Cloud data centres, the most secure cloud data centres in the world,” Oracle and Walmart said in their joint statement.