President Donald Trump has reviewed an agreement between Oracle, Walmart and TikTok Global to address the threat and national security risks posed by TikTok’s operations. Oracle will be responsible for key technologies and security obligations in order to protect all data belonging to American users.
“I gave my blessing to the deal. If they do it, that’s great. If they don’t do it, that’s fine too,” Trump told reporters on the South Lawn of the White House before leaving for North Carolina. “I approved the deal in concept.”
Shortly after Trump’s comments, Oracle announced that it had been chosen as the secure cloud provider for TikTok and that it would become a minority investor with a 12.5% stake. TikTok confirmed Oracle’s role and said it was working with Walmart on a commercial partnership. Walmart will take about 7.5% of the company, according to a person familiar with the matter.
TikTok’s Chinese parent company, ByteDance, will hold the remaining 80%, the person said. However, because 40% of ByteDance belongs to American venture capital firms, the Trump administration can technically claim that TikTok Global is now majority-owned by American money.
TikTok will maintain and expand its headquarters in the United States, the company said, while creating 25,000 jobs across the country. Trump had said a new company would likely be incorporated in Texas.
Trump said the companies would also contribute $5 billion to an education fund.
“We are going to create a very large fund for the education of American youth, and it will be great,” the president said. “This is the contribution I was asking for.”
The U.S. Department of Commerce announced on Saturday that it would postpone the ban on U.S. transactions with TikTok until next Sunday.
The outcome could strengthen Oracle’s position as a company capable of handling demanding IT workloads and help resolve a geopolitical dispute between the United States and China.
TikTok and Oracle both said on Monday that ByteDance, TikTok’s Chinese owner, had sent a proposal to the U.S. Treasury Department over the previous weekend. Reports throughout the week indicated that negotiations had stalled over the specifics of the deal, including the stakes held by Oracle and ByteDance, and control over the recommendation algorithms TikTok uses to promote particular content.
Oracle CEO Safra Catz was a member of President Trump’s transition team, and Oracle chairman Larry Ellison hosted a fundraising event for Trump earlier this year.
“We are 100% confident in our ability to provide a highly secure environment for TikTok and to ensure data privacy for TikTok’s U.S. users and users around the world,” Catz said in a statement on Saturday after Oracle’s role was announced. “This greatly enhanced security and guaranteed privacy will enable the rapid and continued growth of the TikTok user community for the benefit of all stakeholders.”
Oracle already provides cloud infrastructure to online video services 8×8 and Zoom, among other clients, although Amazon, Microsoft and other companies generated more cloud revenue than Oracle in 2019, according to estimates from industry research firm Gartner.
Microsoft had sought to acquire TikTok’s operations in the United States, Canada, Australia and New Zealand, with Walmart as a partner, but said on Sunday that ByteDance had decided not to proceed with that deal.
China and the Trump administration have used tariffs in their trade war in recent years, and their disputes have spilled over into the technology industry. The Committee on Foreign Investment in the United States, part of the Treasury Department, pressed for a sale of the dating app Grindr by the Chinese company that bought it in 2016, and the committee later reviewed ByteDance’s 2017 acquisition of Musical.ly, a video-sharing app that ByteDance merged with TikTok in 2018, over national security concerns. A Trump order in August aimed to block U.S. transactions with ByteDance, as well as Tencent, which owns the messaging app WeChat.
President Trump had taken steps to ban TikTok in the United States or force ByteDance to sell the app’s American assets. The Chinese government subsequently revised its export restrictions so that they now cover, among other things, “recommendation of personalized information services based on data analysis”. TikTok’s app relies on recommendation systems to select the videos shown to each user.
