The Oracle takeover of Tik Tok’s U.S. operations has moved a step closer to happening as President Trump gave the take over his thumbs up. Oracle will take a 12.5% stake in TikTok’s global business, and together with Walmart will own a new company called TikTok Global. The deal now needs approval from the Chinese government.
President Trump declared, “I have given the deal my blessing. I approve the deal in concept.” The deal became necessary as Mr. Trump had moved to shutdown Tik Tok’s US operations calling the video service, which has Chinese ownership, a threat to American security.
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Tik had only yesterday filed a complaint in Federal court against the proposed ban accusing the Trump Administration of targeting the company for political reasons and violating its First Amendment rights.
But the deal will also need Congressional approval and Senate Republicans have voiced their concerns over Tik Tok’s continued ownership vy the Chinese company ByteDance. Senator Josh Hawley, a Republican from Missouri, is a vocal critic of the deal. He wrote in a letter to Treasury Secretary Mnuchin, “The available evidence compels only one conclusion: ByteDance has no intention whatsoever of relinquishing ultimate control of TikTok. That is precisely the problem that the President’s action sought to solve, and it is that same problem that the proposed Oracle partnership leaves fully intact. In short, the proposal violates the President’s executive order.”
— TikTok (@tiktok_us) September 19, 2020
“As part of this proposal, Oracle will become our trusted technology provider, responsible for hosting all US user data and securing associated computer systems to ensure US national security requirements are fully satisfied,” TikTok said. “We are currently working with Wal-Mart on a commercial partnership as well. 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. We will also maintain and expand TikTok Global’s headquarters in the US, while bringing 25,000 jobs across the country.”
Oracle CEO Safra Catz, who coincidentally served on President Trump’s transition team before he assumed office, said in a statement:
“As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global,” said Oracle CEO Safra Catz. “Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world. This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders.”