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The future of the video app TikTok in the United States seems assured after President Donald Trump approved an agreement between Chinese owner ByteDance and American companies.
7:31 PM, September 20, 2020
The global business of Tik Tok I’m moving to a new US-based company, “Probably Texas,” said the US president. Donald trump Sunday night. “I signed the deal.”
A formal lifting of US measures against TikTok is still pending. The Commerce Department postponed the app’s download stop in the US, which should take effect for users starting Monday, by a week.
Trump described TikTok as a security risk because the app belongs to the Chinese group ByteDance. In his opinion, the Chinese authorities could have obtained data from Americans through the application. By following this reasoning, he laid the groundwork for exiting the application in the US with two orders. TikTok and ByteDance replied to no avail that US user data is stored in the US and does not go to China.
100 million users in the US
TikTok has around 100 million users in the US The US government also wanted to take action against the Chinese communication app WeChat, which is used by several million people in the US, primarily to keep in touch. with friends and family in China. WeChat should disappear from app stores in the US on Monday as well, and lose most of the functionality for US users as well. A California judge suspended these penalties with a court order Sunday.
After the TikTok deal, which has now been approved by Trump, the software company Oracle is supposed to process all US user data and take care of the associated technical systems. Trump and TikTok announced that 25,000 jobs would be created in the United States.
A central Trump demand was also that American investors have a majority on TikTok. To date, it has only been officially announced that Oracle will take a 12.5 percent stake in the company ahead of an initial public offering by TikTok Global and supermarket giant Walmart 7.5 percent. Walmart announced that there should be an initial public offering within a year.
ByteDance is targeting a total valuation of $ 60 billion (€ 50.71 billion) for TikTok, the Bloomberg financial service wrote. Oracle and Walmart would have to pay together twelve billion dollars. The price is still being negotiated, Bloomberg restricted, citing insiders. The US Treasury Department said Sunday that the transaction must close before the government can act.
American majority on TikTok
At the same time, the “Wall Street Journal” reported that ByteDance would take the remaining 80 percent of TikTok Global. But: Given that American investors like start-ups Sequoia and General Atlantic in turn owned about 40 percent of ByteDance, one could speak of an American majority on TikTok, people informed the newspaper told. Trump had previously announced: “It will be a completely new company. It will have nothing to do with China.”
The new construction could have the advantage that the Chinese government will not put any obstacles in the way of the agreement. The leadership in Beijing had previously torpedoed a direct sale of the US TikTok business to the Microsoft software group. It introduced a new rule according to which software algorithms can only be sold abroad with the permission of the authorities.
Trump, for his part, had rejected a deal in which Oracle would act as TikTok’s technology partner with a minority stake a few days ago. Then the Commerce Department started the countdown for TikTok to be kicked out of American app stores. The app should no longer work in the US as of mid-November. TikTok and ByteDance filed a lawsuit in Washington.
$ 5 billion in education funding
What’s new is that TikTok will now transfer $ 5 billion to an education fund in Texas, as Trump said in a campaign appearance in Fayetteville, North Carolina. He had previously requested that the United States government obtain some kind of commission to achieve the agreement.
The education fund must ensure that “the real history of our country is taught,” Trump said. A few days ago he announced the formation of a commission to promote patriotic education; the Republican justified it by the fact that the historical importance of slavery was currently being exaggerated.
ByteDance announced Sunday that it “first heard about the $ 1 billion donation in the news.” Bloomberg reported that Trump negotiated it on Friday in a phone call with Oracle founder Larry Ellison and Walmart CEO Doug McMillon.
TikTok already had a cloud agreement with another American company: Amazon’s IT subsidiary, AWS. Trump has attracted more attention in the past with attacks on the online retailer’s founder and boss, Jeff Bezos. Bezos is the private owner of the Washington Post newspaper, in which Trump is often criticized. Oracle founder Ellison, on the other hand, is one of the most prominent Trump supporters in Silicon Valley. Walmart, on the other hand, is a competitor to Amazon.
The judge ruled after a lawsuit by WeChat users against the actions of the United States government. Above all, he argued that stopping WeChat would deprive users of a central communication platform and thus violate their constitutional right to freedom of expression. The plaintiffs have shown that there is no suitable alternative. A court order is justified because the immediate damage would be too great, even if the main proceedings were in favor of WeChat and the users. However, the government was unable to convince them that a total ban is the only way to allay security concerns.
