US President Donald Trump has approved the deal whereby bot Oracle and Walmart will be able to acquire some certain percentage of stake in the popular Chinese video sharing service, TikTok which has now postponed a potential ban which was meant to initially go into effect yesterday September 20th.
With the new deal, Oracle will be able to own a 12.5% stake in the company and then Walmart will take on 7.5% stake in the business which is now incorporated into a newer company called TikTok Global and it’s headquarter will be in the US and provides its services to American users as well as majority of those in other places around the world.
The new reformation includes four of the five board members of the company being Americans while Oracle will be the provider of secure cloud services architecture which will further boost the confidence of the US government into trusting the service enough to be allowed in the country.
“Both companies will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20% cumulative stake in the company,” TikTok said in a statement. “We will also maintain and expand TikTok Global’s headquarters in the US, while bringing 25,000 jobs across the country.”
Both American companies involved in the deal – Oracle and Walmart both confirmed the deal in a separate statement with the latter stating that the IPO of TikTok Global would take place in less than 12 months and that the company will be listed in the US exchange exchange. The partners have also pledged to develop an online educational initiative.
Meanwhile there is still going to be need for an approval from the Chinese government before proceeding with the deal. The ban according to the Commerce Secretary Wilbur Ross will be pushed to September 27th at 11:59p.m
The new agreement followed a big back and forth between TikTok and the US government especially President Trump who had deemed the service to being dangerous to national security because of the fact that it’s owned by ByteDance which is a Chinese tech company.
The fear is that the Chinese government might compel ByteDance into handling over details of American users which is the biggest reason why the service had been under heavy scrutiny fromt he US government for a long time now.
Two executive orders had been issued concerning the popular social network one in August 6th which was meant to bar any transaction between US and ByteDance and was supposed to go into effect on September 20th while another separate executive order was issued later on August 14th which ordered ByteDance to sell its US operations by November 12th.
The reason as mentioned above is that TikTok could be forced to give information to the Chinese government even though there have been no evidence of such an act and the company had continuously denied this allegations.
The Wall Street Journal found that the TikTok app for Android surreptitiously collected device identifiers known as MAC addresses. The practice ended in November.
Meanwhile President Trump had informed reporters that he had given TikTok-Oracle deal his blessing according to Bloomberg. The media company also reported that Oracle will now be able to full access the TikTok’s source code and updates which it can review in order to ensure there is no backdoor built into the system.
Chinese officials have indicated the government is willing to approve an agreement as long as ByteDance doesn’t have to give up the artificial intelligence algorithms behind the app, Bloomberg said.
With the new structuring of the service was affected due to the influence of the US government on the trade ban of TikTok prompting the company’s CEO Kevin Mayer to step down from the role after just a few months of being hired to take the important sit.
Meanwhile about two lawsuits were filed up agains the Trump’s executive order which alleged that the administration had violated the due process clause of the Fifth Amendment which gives companies the chance to be heard but never the case with TikTok.
The allegations also includes the fact that the President acted beyond his legal authority as his administration couldn’t provide any solid evidence of how TikTok is truly a threat to national security.
The president’s order furthers Trump’s “campaign of anti-China rhetoric in the run-up to the US election,” the lawsuit says. It’s unclear what will happen with the lawsuit now that a deal has been approved. The White House didn’t immediately respond to a request for comment.
Then there was another lawsuit filed by Patrick Ryan who is a TikTok employee alleging that the actions of the US president could prevent he and 1,500 US workers of the company from being paid meanwhile it was noted later on that employees continued to be paid according to the Department of Justice.
But never forget that India also banned TikTok and several others including WeChat due to a political rift that happened between both China and India leading to the death of about 20 Indian soldiers.