AsianFin -- U.S. President Donald Trump on Thursday said Chinese leader Xi Jinping gave the nod to the TikTok deal as he was signing an executive order to proceed with the deal allowing the short video application alive in the country.
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Trump said Xi has approved the TikTok deal, which requires the app to be operated by the United States. “I spoke with President Xi and he said, ‘Go ahead with it.’ This is going to be American-operated all the way,” Trump said at a press conference. “I have great respect for President Xi, and I very much appreciate that he approved the deal, because to get it done properly, we really needed the support of China and the approval of China.”
In the executive order titled Saving TikTok While Protecting National Security issued on Thursday, Trump said a plan had been presented to him to qualified divestiture of TikTok’s U.S. operations, which was outlined in the deal. Under the plan, TikTok’s U.S. app will be run by a newly established joint venture based in the U.S. The new venture will be majority-owned and controlled by U.S. individuals, and less than 20% of the entity will be held by TikTok’s Chinese parent ByteDance and its affiliates, with the remaining stake being owned by U.S. investors. This new venture will be operated by a new board of directors and subject to rules that appropriately protect Americans’ data and our national security.
All U.S. user data will be stored in a trusted, secure, and purpose-built cloud environment in the United States run by Oracle in accordance with the Protecting Americans from Foreign Adversary Controlled Applications Act, according to the executive order. The order suggested the new venture will conduct intense monitoring of software updates, the algorithm, and data flows, and it requires all recommendation models, including algorithms, that use U.S. user data to be retrained and monitored by America’s trusted security partners.
The executive order didn’t specify new TikTok investors or more details about the new venture. According to the White House, a new seven-member board will govern the U.S. version of TikTok, with six members being American citizens. U.S. Vice President J.D. Vance at the press conference said the transaction values the American-owned TikTok entity at $14 billion.
Trump at the press conference said Oracle Corp.CEO Larry Ellison is involved in the ownership group and his company will play “a very big part”. Besides them, Trump said other investors being involved in include media mogul Rupert Murdoch and Dell computers CEO Michael Dell, calling them “Great investors.”
Vance said more details about the group of investors will be announced in the coming days. He indicated that Oracle will play a central role in the future operations of the app.
Asked if he would make the U.S.-controlled TikTok would start prioritizing Maga-related content, Trump said “If I could, I’d make it 100% Maga-related”, but hinted the app would continue recommending a wide variety of content as before.“Every group, every philosophy, every policy will be treated very fairly,” he said.
An investor consortium including Oracle, Silver Lake, a private equity firm, and venture capital firm Andreessen Horowitz will form a new U.S. entity to control TikTok’s business in the country under a framework that Washington and Beijing are finalizing, the Wall Street Journal last week.
The new joint venture controlling TikTok’s U.S. business would lease its duplicate copy of algorithm from ByteDance, and Oracle will then verify the retraining of the algorithm and protect U.S. users' data, a senior White House official revealed on Monday.
Oracle, partnering with the U.S. government, was on Monday reported to be in charge of algorithm retraining, application development and source code review, and data from U.S. users would be stored in a secure cloud managed by Oracle. ByteDance would reportedly not have access to information on TikTok’s US subscribers, nor would it have any control over the algorithm in the U.S.
Oracle, Silver Lake and the Abu Dhabi-based MGX investment fund will be main investors in TikTok’s U.S. business, controlling a roughly 45% stake in the entity, while ByteDance investors and new holders will own 35%, CNBC reported Thursday. Oracle will oversee TikTok’s security operations and continue providing cloud computing services for the new U.S. entity, per the report.
