Bytedance's TikTok proposal isn't just up to Trump

Lianna Brinded
·Head of Yahoo Finance UK
·2 mins read
While exact details of the deal have not been confirmed publicly, reports say the proposal completely avoids the outright sale of TikTok's US arm. Photo: Chesnot/Getty Images
While exact details of the deal have not been confirmed publicly, reports say the proposal completely avoids the outright sale of TikTok's US arm. Photo: Chesnot/Getty Images

ByteDance, the world’s most valuable start-up, warned on Thursday that its proposal to seal a partnership — rather than an outright sale — between TikTok US and computing tech giant Oracle (ORCL) will ultimately need approval from both China and US officials.

ByteDance, valued at $78bn (£61bn), only launched video sharing app TikTok in September 2016 but, outside China, it has already amassed 300 million active users and 1.4 billion total installs to date. TikTok has been downloaded 175 million times in the US alone.

On 14 September, Oracle confirmed in a statement that it had won the bid for TikTok US over Microsoft (MSFT) as a “trusted technology provider.”

While exact details of the deal have not been confirmed publicly, a range of media reports say the proposal completely avoids the outright sale of the US arm of the social video platform giant and that ByteDance will keep a majority ownership of TikTok.

China's state broadcaster CGTN reported that ByteDance will not sell TikTok's US operations to Oracle and South China Morning Post said that the tech upstart has decided not to sell or transfer the source code behind its popular video app. Reuters also supported these reports that the Oracle deal would not require ByteDance to apply to Chinese authorities for an export license for TikTok’s algorithm.

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However, the ByteDance proposal massively conflicts with US president Donald Trump’s two executive orders:

  • On 6 August, Trump signed an executive order on giving Americans 45 days to stop doing business with ByteDance — due to come into effect on 20 September.

  • The second requires ByteDance to sell TikTok by 12 November.

Trump’s administration, and a number of governments around the world, have voiced concern over TikTok being a data and security risk.

But even before Oracle confirmed it will be part of ByteDance’s proposal, Trump in August gave his blessing for technology company Oracle — run by Trump supporter Larry Ellison — to enter the running.

Company watchers see this as potentially sweetening the ask for Trump’s administration to approve the proposal — even if it counteracts the US president’s executive order for TikTok US to sell up and divest.

China officials would also have to approve the agreement. Earlier this month, China said it would rather see TikTok US close rather than be pushed into a forced sale.