They proved it pays to pay Trump after all. I was silly for doubting that.
TikTok’s deal ended up involving Walmart and Oracle holding very small portions of a new company, “TikTok Global.” The majority owner will still be ByteDance, by a wide margin.
However, Oracle, the… fourth largest cloud service provider in the U.S. says they’ll keep all American data in the U.S.
The deal solves no security concerns and leaves control of TikTok largely in ByteDance’s hands.
But more importantly, it boosts the business of Trump supporters and makes Trump feel like he got a “win,” all while reducing trust in the platform.
If you were actually interested in this deal for security, or you believed security was Trump’s primary concern, this deal will disappoint.
Details of the Deal
TikTok Global would become a new entity under the agreement. Oracle will own 12.5% of it, and would be TikTok Global’s “trusted technology partner,” providing the U.S.-based data hosting. They claim data will not leave U.S. servers, however, the algorithms will still be ByteDance’s. Furthermore, the data will always be just one “mistake” away from going elsewhere.
Walmart will own 7.5% of the new company. They’ll provide eCommerce and payment services. It sounds like TikTok’s going to become a storefront. Perhaps users will be able to buy advertised items directly from the app, and creators will be able to promote their own content. Walmart will also benefit from TikTok’s extensive data collection and recommendation engine.
What about the other 80%? The giant, majority stake? That’ll be ByteDance’s.
Yes, ByteDance will still control a majority of TikTok Global. The company that was supposed to sell TikTok will still own 80%. But for some reason, Trump’s happy with it.
Part of that comes from the IPO.
IPO For 40%
ByteDance will sell half of its 80% stake. 40% of TikTok Global will be publicly traded in U.S. markets. This means that ByteDance will still be the majority shareholder, but, technically speaking, a majority of the company will belong to U.S. shareholders.
This is just enough for Trump to say it’s now an American company and declare his mission a success. However, ByteDance will still have a majority share and their data analytics aren’t leaving China. Really, if security and privacy were Trump’s actual concerns, this wouldn’t be enough.
Of course, if his actual mission was to help Trump supporters and create negative attention around a social network with a large young user base who have organized against Trump right before an election, then mission accomplished.
For now, TikTok will remain available in the United States. This is more a stay of execution, but it seems Trump’s prepared for a full pardon.
Sources:
- Issie Lapowsky and Emily Birnbaum, Protocol
- Jonathan Shieber, TechCrunch