For a week now, the White House has indicated that a deal is on the horizon to transfer TikTok’s ownership to an American company. Donald Trump is set to sign an executive order this week that will establish a framework for a consortium of investors to take over the operations of the US-Chinese social media platform.
On Monday, officials from the White House revealed that US software company Oracle would license TikTok’s recommended algorithm as part of the agreement. This collaboration expands the existing management of TikTok data collected from US users.
The US president had a phone conversation with Chinese President Xi Jinping on Friday, sharing on Truth Social that the call was “very good” and expressing gratitude for “TikTok’s approval.” Earlier in the week, leaders from both countries met in Madrid, Spain, to discuss trade agreements related to TikTok’s ownership.
The status of popular apps in the US has been uncertain for over a year, stemming from a 2024 Congressional vote that overwhelmingly approved a law banning social media apps unless they could find US buyers. The Supreme Court upheld the law in January, but on his first day in office, Trump signed an executive order delaying the ban. He has consistently postponed TikTok’s ban, which was initially his proposal, until a deal could be finalized.
Here’s what we know about the forthcoming agreements, including the involvement of media moguls and Oracle’s Larry Ellison alongside the Murdoch family, who recently surpassed Elon Musk as the richest individuals globally:
What are the terms of the transaction?
The deal aims to keep TikTok operational in the US, but under new ownership that is not linked to China. Lawmakers argue that a popular social media app owned by a Chinese entity poses risks, enabling potential propaganda spread among its 180 million US users.
At least 12 investors have shown interest in acquiring TikTok, including a consortium led by software giant Oracle. A complete roster of investors has yet to be disclosed. According to White House officials, Oracle is responsible for managing data for US users and overseeing TikTok’s influential recommendation algorithms, ensuring that information remains outside the jurisdiction of Chinese authorities.
ByteDance will ultimately retain less than 20% ownership of the app, as White House officials told Reuters, with US TikTok operations managed by a blend of existing US and global firms, along with new investors devoid of ties to Chinese authorities.
The agreement mandates that all data pertaining to US users be stored domestically within cloud infrastructure managed by Oracle.
Who is involved?
Trump mentioned in a Fox News Sunday interview that media tycoon Rupert Murdoch and his son Lachlan, CEO of Fox Corporation, might join the deal. He also indicated that Michael Dell, CEO of Dell Technologies, is involved.
Larry Ellison, co-founder of Oracle, has been a key player among the potential buyers for quite some time. He leads a consortium that includes asset manager Blackstone, private equity firm Silverlake, Walmart, and billionaire Frank McCourt.
According to Reuters, the US government will not have a seat on the board or a golden share in the new entity that owns TikTok within the US. It remains uncertain if the US government will receive financial considerations as a condition for approval.
Why is this happening?
The prospect of banning TikTok began with Trump in 2020, citing that apps owned by China pose national security risks. This issue soon garnered bipartisan consensus, leading Congress to overwhelmingly pass a law last year that mandated the app’s ban unless sold by its Chinese owners. The initial deadline for TikTok’s ban was set for January 19th.
After embracing the app during his presidential campaign last year, Trump shifted his perspective on TikTok, gaining millions of followers and hosting TikTok CEO Shaw Chew at Mar-a-Lago and the White House. The president has praised social media platforms for enhancing his connection with younger voters in the 2024 election.
Trump issued the first executive order in January to delay the TikTok ban, subsequently signing three more orders to postpone enforcement until a deal could be reached. Currently, the president is delaying the enforcement of the law until mid-December, as transaction details are settled to ensure the new ownership is eligible for a complete sale.
What does the executive order do?
The order is expected to delineate the framework of the TikTok transaction and ensure the agreement complies with US law. The proposal reportedly includes a seven-member board comprised of Americans, and TikTok’s algorithm will be leased to the new US owner.
Trump’s executive order is anticipated to feature a new 120-day suspension of enforcement to facilitate investors and finalizing contracts.
Does China agree?
The US is optimistic about China’s approval of the deal and doesn’t plan further discussions with Beijing on the details, as White House officials explained to reporters during a conference call. However, they noted that additional documentation from both parties would be necessary for deal approval.
China has yet to confirm its approval of the transaction. ByteDance stated that while discussions about the app’s resolution are ongoing with the US government, any contracts will be “subject to approval under Chinese law.”
Source: www.theguardian.com
