When it comes to who will control TikTok, Washington and Beijing are dancing to completely different tunes.
Chinese tech giant ByteDance insisted on Monday it will keep the reins of the wildly popular dance-video app, even as it cut a deal with Oracle and Walmart to avoid its shutdown in the US.
In a statement addressing “rumors” that TikTok would become an American-owned company, ByteDance said TikTok Global, a new US-based company set up to run the app in the states, was its “100 [percent] owned subsidiary.” The stake will drop to 80 percent after a “small round” of financing before the new company goes publics next year, according to the statement posted on WeChat, a Chinese social media platform.
But Americans will actually control 53 percent of the equity in TikTok Global, a US-based source familiar with the deal told The Post. That will include Oracle and Walmart’s combined 20 percent stake, while the rest will be held by US investors who already own a chunk of ByteDance, such as buyout firm General Atlantic, according to the source.
ByteDance’s insistence that it still has power over TikTok appears to be designed to help make the sale easier for Beijing — which still needs to approve the deal — to swallow, the US-based source added.
“They’re a Chinese entity and they’re speaking to the Chinese government,” the source said.
Another 36 percent will be owned by ByteDance’s existing Chinese investors — including founder Zhang Yiming, who The Post’s source estimated will end up with 20 percent of the company. The final 11 percent will be owned by international, non-Chinese investors who also have stakes in ByteDance, the source said.
Insiders say the starkly conflicting accounts of the deal could point to trouble as both sides look to get it closed. President Trump gave the partnership his “blessing” over the weekend. In addition to the 53 percent American ownership stake — including a 20 percent cut for software firm Oracle and retail giant Walmart — four out of TikTok Global’s five board seats will be occupied by Americans, with the fifth held by Yiming.
In a Monday statement, Oracle executive vice president Ken Glueck insisted that “ByteDance will have no ownership” of the new company.
“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,” he said.
President Trump, who kicked off the saga over the summer when he signed an executive order banning TikTok in the United States unless it was sold to a “very American company” over concerns that China’s authoritarian government could use the data it collected to spy on Americans, reiterated on Monday that no deal would go through if ByteDance has a control over the new company.
“It’s going to be controlled, totally controlled by Oracle, and then I guess they’re going public and they’re buying out the rest of it, they’re buying out a lot,” Trump said. “And if we find that they don’t have total control, then we’re not going to approve the deal.”
“It’s all going to be run by Walmart — 100 percent — and Oracle,” he added.
A ByteDance spokesman did not immediately respond to a request for comment on Trump’s remarks.
But the two US companies said TikTok Global’s American ownership would “increase and continue to grow over time” following its initial public offering on a US stock exchange, which is expected to take place within a year.
Additionally, American investors such as Silicon Valley-based venture firm Sequoia Capital and buyout firm General Atlantic already own about 40 percent of ByteDance, suggesting they would have indirect ownership of TikTok Global.
ByteDance’s deal with Oracle and Walmart allowed it to avert President Trump’s threat to ban TikTok in the US, where the app has 100 million users. The Trump administration has expressed concerns that TikTok user data could be shared with the Chinese government, allegations the app has denied.
In its statement, ByteDance said the deal doesn’t involve the transfer of any technologies — such as TikTok’s signature algorithm — though Oracle will be able to review the app’s source code. Oracle and Walmart have said TikTok Global would possess all of TikTok’s technologies.
With Post wires
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September 21, 2020 at 08:03PM
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