ByteDance, the Beijing-based owner of TikTok, and Oracle, which is proposing to operate and safeguard the app in the US, released contradictory statements about who would be in charge of TikTok Global, the new US-based company created by the deal.
TikTok parent company ByteDance said it will retain an 80% stake in TikTok after selling a total of 20% to Oracle, its trusted technology partner and its commercial partner Walmart.
Later on Monday, Oracle executive vice-president Ken Glueck said that ByteDance would have no ownership in TikTok Global and shares in the new entity will be distributed to their owners with Americans becoming be the majority holders.
Upon creation of TikTok Global, Oracle and Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global.Ken Glueck – Vice President Oracle
President Donald Trump also spoke out, pledging to act if TikTok Global were not controlled by US companies.
If we find out that they don’t have total control, then we’re not going to approve the deal.Donald Trump – US President
TikTok Global would eventually be 53% owned by US firms after the proposed share distribution. But the Chinese backers of ByteDance were against distributing shares to existing investors. The back-and-forth also raised doubts about the deal in China. Late on Monday in Beijing, the Chinese government would not approve the current deal because the agreement would endanger China’s national security, interests and dignity.
Transfer of source code and technology
In its statement on Monday, ByteDance said the proposal did not include the transfer of source code or technology while Oracle and Walmart had said all the TikTok technology will be in possession of TikTok Global but did not specify who would control it. ByteDance also confirm Oracle had the right to conduct security inspections on TikTok’s US source code.
Trump wants $5 billion for American education from this deal
ByteDance once again contested the $5 billion that Mr Trump said the company would pay to finance an education fund as part of the deal. It said this was an estimate of the future taxes TikTok Global might pay, but the real amount would depend on the company’s growth.
ByteDance needs to argue there is no transfer of technology to the US in order to appease the Chinese government, which recently prohibited unlicensed exports of artificial intelligence recommendation algorithms. But Luo Zhiyu, a lawyer at Beijing-based Jingsh Law Firm, said a transfer of technology from a Chinese company to a business under the jurisdiction of US law would count as an export and would still need to go through technology export procedures.