TikTok has confirmed Oracle's announcement, and also added that they are also now working on a deal with Walmart. Both Oracle and Walmart will "take part in a pre-IPO financing round in which they can take up to a 20 percent cumulative stake in the company", said a company statement.
As President Donald Trump seeks a breakthrough with voters to win a second term in the November 3 election, he has increasingly put national security and his aggressive stance toward China at the center of his campaign.
TikTok was scheduled to be removed from app stores and future update considerations in the USA on Sunday, September 20, after the Trump administration initially issued an executive order on August 6 to investigate the social site's security.
Data privacy for 100 million American TikTok users will be quickly established by moving all American data to Oracle's Generation 2 Cloud data centers, the most secure cloud data centers in the world.
TikTok Global will be a new company created to manage the USA operations and most of the users in the rest of the world.
Trump has claimed for weeks that TikTok is collecting user data for Beijing, without ever providing evidence for his allegations.
TikTok has also gone on record, confirming the emergence of TikTok Global, as well as discussions with Walmart on a "commercial partnership".
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Commerce Secretary Wilbur Ross said last week the president "will do everything in his power to guarantee our national security and protect Americans from the threats of the Chinese Communist Party". Users on WeChat also use the app to purchase flights, read the news and transfer money. The Chinese government did not name any single United States or Western company that it would place on the list, but said that any entity threatening the "national sovereignty, security or development interests of China" would be added to it.
Thus, the potential deal, which has yet to be approved by the Chinese government, falls short of Trump's initial demand and the executive order he signed in August, which required ByteDance to sell its USA arm of TikTok.
Oracle said that all TikTok technology will be in possession of TikTok Global, which will "comply with US laws and privacy regulations".
WeChat has had an average of 19 million daily active users in the United States, analytics firms Apptopia said in early August.
"While the US/China tensions continue across all aspects of the technology food chain, resolving this TikTok and ByteDance standoff and complex Rubik's Cube political backdrop is a relief for tech investors with Oracle in the winners circle", said Wedbush analyst Dan Ives. Like with TikTok, politicians have been anxious that China might push Tencent-owned WeChat to spy on Americans. Ironically, preventing users from downloading TikTok app updates is likely creating a bigger mess than the one it is purportedly preventing (unconfirmed potential Chinese spying).
TikTok is facing a US ban if a deal is not reached.
The new company, TikTok Global, will have a majority of USA directors along with a United States chief executive and security expert.