Faced with a possible ban in the U.S., TikTok is reportedly taking a new look at creating a separate U.S. operation that would include Walmart and Oracle.
According to the New York Post, in response to reported demands from the Biden administration to ByteDance, the Chinese company which owns TikTok, to sell its shares in the popular short video platform or face a ban in the U.S., TikTok is privately exploring options to at least sell off its U.S. business.
Those options may include a deal that would shift partial ownership of TikTok’s U.S. business to Walmart and Oracle, which was initially supported by the Trump administration in 2020 (see more below).
[Read more: Report: U.S. threatens TikTok ban unless Chinese owner divests]
The U.S. federal government, as well as 30 U.S. states, have already banned TikTok from any governmental devices or systems, due to concerns sensitive user data could be furnished to the Chinese government. Both TikTok and the Chinese government have publicly denied any security risks for U.S. users.
In December 2022, Sen. Marco Rubio (R-FL) introduced bipartisan legislation to ban TikTok from operating in the United States. The “Averting the National Threat of Internet Surveillance, Oppressive Censorship and Influence, and Algorithmic Learning by the Chinese Communist Party Act (ANTI-SOCIAL CCP Act)” would block and prohibit all transactions from any social media company in, or under the influence of, China, Russia, and several other foreign countries of concern.
However, the legislation’s sponsors have publicly stated that its main target is TikTok. Read more from the New York Posthere.
TikTok, Walmart and Oracle – a brief look
Citing concerns over possible ByteDance connections to the Chinese Communist Party, the Trump administration had been actively attempting to ban TikTok from operating in the U.S. unless it established a separate business with at least partial U.S. ownership.
In September 2020, Oracle and Walmart received tentative U.S. approval for a joint 20% acquisition of a new business that would be called TikTok Global. However, with the change in presidential administrations in early 2021, ByteDance reportedly lost interest in the Trump-sanctioned Oracle/Walmart deal, and instead sought to develop an alternative structure to its U.S. operations.
The nixed deal would have seen Walmart enter into commercial agreements to provide e-commerce, fulfillment, payments, measurement-as-a-service advertising, and other omnichannel services to TikTok Global.
Under the previously considered deal, TikTok Global would be responsible for providing all TikTok services to users in the U.S. and most of the rest of the world. It would 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 would serve as TikTok’s secure cloud provider and store data from TikTok’s estimated 100 million U.S. users in its cloud data centers.
U.S. retailers, consumers cozy up to TikTok
Security concerns have not so far stopped U.S. consumers or retailers from actively pursuing shopping-related activities on the platform, which focuses on user-generated short-form videos.
Retailers including Walmart, Saks and Instacart have partnered with TikTok, and Bazaarvoice data indicates TikTok shopping levels grew 567% in 2021. And earlier in December, Amazon added a Tik Tok-inspired feature called Inspire to its shopping app. Inspire is designed to provide customers with a new way to discover ideas, explore products, and seamlessly shop from content created by other customers, influencers, and brands.
In addition, media reports have indicated TikTok is testing an e-commerce feature called TikTok Shop in the U.S. TikTok Shop currently operates in the U.K. and Southeast Asia. The pilot of TikTok Shop in the U.S. is said to be part of a larger effort by TikTok’s parent company, China-based ByteDance, to establish a robust livestream shopping business in the U.S. which it internally refers to as “Project Aquaman.”
[Read more: Report: TikTok pilots in-app commerce in the U.S.]