Monday, September 21, 2020

TikTok US ban postponed as Trump approves Oracle/Walmart deal | Music Ally

It’s been another topsy-turvy weekend in the US for TikTok. On Friday, the Department of Commerce announced that as of 20 September (Sunday) US app stores would be banned from making the app available to download, or for it to be updated for existing users.

Yet on Saturday, the department announced that “in the light of recent positive developments” the ban would be delayed a week until 27 September.

TikTok’s parent company ByteDance had filed a lawsuit on Friday against the Trump administration to try to block the ban, but as the ‘positive developments’ quote shows, that wasn’t the reason for the delay.

On Saturday, the president himself said that he was happy with the proposed deal between ByteDance/TikTok, tech firm Oracle and retailer Walmart. “I have given the deal my blessing,” he told reporters. “I approved the deal in concept.”

TikTok confirmed the news yesterday. “We’re pleased that today we’ve confirmed a proposal that resolves the Administration’s security concerns and settles questions around TikTok’s future in the US,” wrote interim head Vanessa Pappas.

“Both Oracle and Walmart will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20% cumulative stake in the company. We will also maintain and expand the US as TikTok Global’s headquarters while bringing 25,000 jobs across the country.”

Oracle separately announced details, claiming that TikTok Global will be “majority owned by American investors” including the 20% stake for Oracle and Walmart. The other 80% will be owned by ByteDance, but CNBC reporter Alex Sherman suggested that “40% of ByteDance’s ownership is US venture capital funding. That’s how the Trump admin is calculating this deal as ‘majority US $'”.

As previously trailed, this new TikTok Global entity will go public (“in less than 12 months” according to Oracle) and will be listed on a US stock exchange.

Yet another twist was provided by Trump telling supporters at a rally that as part of the deal with ByteDance: “They are going to pay $5bn into a fund for education so we can educate people as to the real history of our country”.

ByteDance has since said that the first it knew of this supposed fund were the media reports of Trump’s comments, although Oracle’s statement did talk about “an educational initiative to develop and deliver an AI-driven online video curriculum to teach children from inner cities to the suburbs, a variety of courses from basic reading and math to science, history and computer engineering”.

TikTok may be inching closer to safety in the US, but the longer-term ramifications remain unclear – not least the precedent being set of a country’s government forcing a foreign-owned company to change its ownership structure and work with a tech-infrastructure partner from that country, or face a ban. If the US can do it, why shouldn’t others?

The knock-on effects from recent months seem likely to last much longer – regardless of the result in November’s US election – than the president who drove them.

Stuart Dredge


No comments: