Donald Trump says Oracle's TikTok deal is off if ByteDance keeps control
US President Donald 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 to his statement over the weekend that the deal had his "blessing".
Speaking in an interview on Fox News, Trump said he wouldn't support the deal if the Chinese owner 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 are going to buy it," he said, referring to Oracle and Walmart. "They're 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."
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Trump also indicated that he expected Chinese influence to be diluted by a public offering of TikTok Global, which an offering process has started.
Soon after Trump's Monday comments, Hu Xijin, editor-in-chief of the China state-affiliated Global Times, tweeted that Beijing would likely reject the deal "because the agreement would endanger China's national security, interests and dignity".
Global Times is a tabloid run by People's Daily - the flagship newspaper of the Communist Party.
The rapid-fire comments from both sides reflected the critical stage the deal has entered to hash out an agreement that would keep both Washington and Beijing happy, a likely delicate balance.
The Trump administration requires the US operations of TikTok, which has more than 100 million US users, to be owned by an American owner to protect sensitive data for national security reasons. China has recently updated its tech export control rules that requires Beijing to sign off on foreign ownership of Chinese technologies such as the algorithm TikTok uses.
ByteDance said in a post on Monday, following Trump's weekend announcement of allowing the deal to go through, that it will retain 80 per cent of stake in TikTok Global after a small pre-IPO funding round. Oracle will take a 12.5 per cent stake while Walmart has tentatively agreed to acquire 7.5 per cent.
The owner of TikTok has faced pressure in China for giving in to the Trump administration too easily as the discussions to sell its US business to an American buyer ramped up.
In a post on news site Jinri Toutiao, ByteDance also denied the company had committed US$5 billion in taxes to the US Treasury or to create a US$5 billion education fund in the US as conditions of the deal.
On Saturday, Trump said TikTok US "will be totally controlled by Oracle and Walmart" and "the security will be 100 per cent".
When Trump insisted in August that ByteDance sell the app's US operations, he was aiming for a clear-cut deal that would hand him a win over China. Trump said that TikTok's Chinese owner can turn users' personal data over to the Chinese government. Failing to reach a deal will result in a ban of the app in the US.
Oracle, which has close ties to the Trump administration, emerged late in negotiations, edging out Microsoft in a bid.
Under the current structure, TikTok founder will remain on the board. Walmart CEO Doug McMillon will become a director. TikTok Global is likely to be headquartered in Texas and will hire at least 25,000 people, said Trump.
The price tag for TikTok has been a moving target ranging from US$20 billion to US$60 billion.
Oracle will get full access to review TikTok's source code and updates to make sure there are no back doors used by the company's Chinese parent to gather data.
This article originally appeared on the South China Morning Post (SCMP).
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
