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TikTok close to salvation after Donald Trump gives 'blessing' to tie-up with Oracle

U.S. President Donald Trump talks to reporters as he departs for campaign travel to Minnesota from the South Lawn at the White House in Washington, U.S., September 18, 2020 - Kevin Lamarque/Reuters
U.S. President Donald Trump talks to reporters as he departs for campaign travel to Minnesota from the South Lawn at the White House in Washington, U.S., September 18, 2020 - Kevin Lamarque/Reuters

TikTok's future in the United States looked close to secure after a new rescue deal received both the "blessing" of President Donald Trump and the cautious praise of China's state media.

The Chinese viral video app confirmed on Sunday that it hoped to hand over its 100m American users to a new US-headquarted company called TikTok Global, entrusting their data and a large ownership stake to Californian cloud provider Oracle.

Mr Trump said that he had "approve[d] the deal in concept", extolling it as a "great deal for America" with "100pc" security and delaying his threatened ban for one week.

The President had previously ordered TikTok's parent company, ByteDance, to sell out of its US interests or else be forced out over fears that Americans' private data could fall into the hands of Beijing.

The current deal is a retreat from that position: ByteDance would still own 80pc of TikTok Global, with the rest going to Oracle and the US supermarket chain Walmart. But Walmart claimed that the new company would aim to float on US stock markets "within the next year".

Meanwhile, the editor of China's Global Times newspaper, widely regarded as the Chinese Communist Party's attack dog abroad, described the deal as "still unfair, [but] relatively more reasonable".

The plan needs to be signed off by the Chinese government, which has introduced more intensive restrictions on the sale of Chinese intellectual property, including TikTok’s sought-after recommendation algorithms.

TikTok said: "We are pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the US administration and settle questions around TikTok's future in the US.

"As part of this proposal, Oracle will become our trusted technology provider, responsible for hosting all US user data and securing associated computer systems."

Separately, Mr Trump's attempt to ban the popular Chinese messaging app WeChat from US app stores was halted by a US judge, who expressed concerns about free speech and free association.

If approved, TikTok's deal would end weeks of frenzied negotiations and diplomatic ambushes as ByteDance raced to save one of its most valuable markets on a 90-day deadline imposed by Mr Trump.

Routing users' data through Oracle could allay Washington's national security concerns while also obeying China's new export curbs by letting ByteDance retain control of the algorithms that have powered TikTok's success.

Yet that would contradict Mr Trump's claim on Saturday that the new deal has "nothing to do with China". Sources told Reuters that TikTok Global would still be majority-American after taking into account the 40pc of ByteDance's shareholders that are based in the US.

The new deal is not very different from what ByteDance had been discussing with those US investors before Mr Trump's intervention, and no better for the US than Microsoft's attempt to buy TikTok wholesale last month.

That has led some observers to raise questions over Mr Trump's political connections to Oracle, whose biggest shareholder Larry Ellison is one of his few major supporters in Silicon Valley.

In a TV interview on Sunday, US secretary of state Mike Pompeo defended the deal, describing ByteDance as a "just passive shareholder who collects money".

He said: "Whether there is still some Chinese ownership or they still collect a royalty check from the benefits of the business, there will be an American headquarters. It will be controlled by Americans.

"And the data – most importantly, the data, the very reason we have gone after TikTok – that data will be in a place [where] we have confidence that no American will have the risk that their data will end up in the hands of the Chinese Communist Party."

Interim head of TikTok Vanessa Pappas struck a different tone in a jubilant message to TikTok users, vowing: "We are here for you, and we are here for the long run."