US President Donald Trump and Beijing are at loggerheads over ByteDance’s deal with Oracle and Walmart for its US TikTok assets, with Trump wanting US control to safeguard national security and Beijing reluctant to approve a deal that looks like a US victory.
And the war of words between the two sides risks throwing the carefully negotiated transaction into deeper uncertainty, amid worsening relations between China and the US.
Trump said on Monday he would not approve a deal between Oracle and TikTok unless the US owners gain control over the popular Chinese-owned, video-sharing app, in a reversal of his statement over the weekend that the deal had his “blessing”.
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In an interview on Fox News, Trump said he would not support the deal if ByteDance retains control of TikTok. ByteDance “will have nothing to do with it, and if they do, we just won’t make the deal,” Trump said.
“They [Oracle and Walmart] are going to have total control over it. They’re going to own the controlling interest. And if we find that they don’t have total control, then we’re not going to approve the deal,” Trump said.
Trump also indicated that he expected Chinese influence to be diluted by a public offering of TikTok Global, which is expected to take place on an American stock exchange within 12 months.
ByteDance has said that it will still hold an 80 per cent stake in TikTok Global, the new company to be formed as part of the deal, with Oracle and Walmart holding up to a combined 20 per cent stake, after a pre-IPO financing round.
However, Oracle has said that its new TikTok venture will be entirely divested from ByteDance.
“Upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global,” Oracle said in a statement to reporters late on Monday in the US.
China watchers said that Beijing will likely not approve a deal that looks like a loss of face for them and a home run for the US administration. ByteDance has also had to face a hostile public in China, and has been accused of “kneeling down” to the US.
“Given the current situation, especially the close relationship between Trump and Oracle’s co-founder [Larry Ellison], I think ByteDance needs to be prepared that the Chinese government may not approve the deal,” said Mei Xinyu, a researcher at China’s Ministry of Commerce, on Tuesday.
“From the information shared by the US side, the TikTok deal is unfair and unilaterally meets the unreasonable requirements from the US side,” said Hu Xinjin, editor of the Global Times, in a Weibo post on Monday. “It is hard to believe that Beijing will approve such a deal.”
Global Times is a tabloid run by People’s Daily – the flagship newspaper of the Chinese Communist Party.
Hu argued that if Oracle gains access to TikTok’s algorithm under the deal, it means that the US has obtained the company’s core technology. A Chinese government source told the Post earlier this month that “the car can be sold, but not the engine.”
“ByteDance is an ordinary Chinese business company. The US uses its national power to suppress it and force it to sign a treaty concluded with the enemy who have reached the city wall,” Hu wrote. “However, as a big country, China will not succumb to US intimidation and accept an unequal deal targeting Chinese companies.”
Meanwhile, China has released details of how its new “unreliable entities list” will work – designed as a rejoinder to the US Entity List, a trade blacklist that has targeted Huawei and leading Chinese AI firms in the name of national security.
According to a statement issued by the China’s Commerce Ministry on Saturday, firms and individuals on the blacklist will be restricted or banned entirely from trading – both imports and exports – with China and also from investing in the country.
“I think for Chinese firms, there is a realisation that ... Beijing’s perception will affect how [Chinese tech] companies operate, to what extent they’re allowed to handle certain kinds of sensitive data. And to what extent they’ll be welcomed by consumers [outside China],” said Dev Lewis, a fellow at the Hong Kong-based think tank Digital Asia Hub.
The Chinese government also updated its technology export control list last month to require official permission for technologies, such as TikTok’s algorithm, to be sent offshore.
There are also some grey areas over the future board of directors at TikTok Global.
In a joint statement by Walmart and Oracle on the TikTok deal, the two companies said there will be four Americans on the five-member Board of Directors at TikTok Global.
In a separate statement by ByteDance on Monday, it said TikTok Global’s board directors will include ByteDance founder Zhang Yiming, ByteDance’s existing board members, and Walmart’s CEO.
ByteDance currently has five board directors, three of them are Americans and two of them are Chinese, according to public information on its website.
If the statements are consistent, this could mean that leading VC figure Neil Shen, steward of Sequoia Capital and managing partner at Sequoia China, will no longer be on the board in future.
This article Trump and Beijing face off again: Both don’t like ByteDance’s Oracle deal but for different reasons first appeared on South China Morning Post