Oracle, Walmart receive tentative U.S. approval for TikTok deal

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Oracle, Walmart receive tentative U.S. approval for TikTok deal

By Dan Berthiaume - 09/21/2020

Walmart is bringing its omnichannel retail capabilities to TikTok.

Oracle and Walmart have issued a joint statement saying TikTok parent ByteDance, which is based in China, has received tentative approval for an operating agreement with the U.S. government that will include the two U.S. companies investing to acquire 20% of a new business that will be called TikTok Global.

TikTok Global will be responsible for providing all TikTok services to users in the U.S. and most of the rest of the world. It will be an independent American company, headquartered in the U.S., with majority U.S. ownership including the 41% of ByteDance currently held by American investors. Oracle will serve as TikTok’s secure cloud provider and store data from TikTok’s estimated 100 million U.S. users on its Generation 2 Cloud data centers.

Walmart, which will purchase 7.5% of TikTok Global as part of the deal, will enter into commercial agreements to provide e-commerce, fulfillment, payments, measurement-as-a-service advertising service, and other omnichannel services to TikTok Global. Walmart CEO Doug McMillon would also serve as one of five board members of the newly created company. Four board members will be from the U.S.

As recently as Friday, Sept. 18, it appeared TikTok would have all new downloads and upgrades of its app in the U.S. banned due to Trump administration concerns over ByteDance’s connections to the Chinese Communist Party. However, reports at that time indicated Oracle and Walmart had reached a tentative agreement to partner with TikTok’s U.S. business without becoming outright owners. 

On Saturday, Sept. 19, President Trump told White House reporters he had approved the deal in concept. Any final deal will still need approval from both the U.S. and Chinese governments.

TikTok Global, together with Oracle, Walmart, SIG, General Atlantic, Sequoia, and Coatue, will also create an educational initiative to develop and deliver an artificial intelligence (AI)-driven online video curriculum to teach children a variety of courses from basic reading and math to science, history and computer engineering. 

The company is expected to create more than 25,000 new jobs in the U.S. and pay more than $5 billion in new tax dollars to the U.S. Treasury. The company will have an Initial Public Offering (IPO) in less than 12 months and be listed on a U.S. exchange.