Oracle and Walmart have agreed to acquire a 20% stake in TikTok’s global business as part of a pre-IPO financing round. Oracle will acquire 12.5% of the video sharing platform, while Walmart will have a 7.5% stake.
Walmart CEO Doug McMillon will join the company’s board. ByteDance founder Zhang Yiming and the Chinese company’s current directors — Sequoia China’s Neil Shen and General Atlantic’s William Ford — will reprise their roles.
The partnership will create a new company, TikTok Global, that will go public in less than 12 months on a U.S. exchange, and over time “U.S. ownership of TikTok Global will increase and continue to grow”.
Walmart said in a statement:
We are excited about our potential investment in and commercial agreements with TikTok Global. While there is still work to do on final agreements, we have tentatively agreed to purchase 7.5% of TikTok Global as well as enter into commercial agreements to provide our ecommerce, fulfillment, payments and other omnichannel services to TikTok Global.
Our CEO, Doug McMillon, would also serve as one of five board members of the newly created company. In addition, we would work toward an initial public offering of the company in the United States within the next year to bring even more ownership to American citizens. The final transaction will need to be approved by the relevant U.S. government agencies.
Vanessa Pappas, interim head of TikTok, in a statement confirmed that ByteDance will retain full control of its social media algorithms but will allow Oracle limited access to view source code for “safety” purposes.
We’re pleased that today we’ve confirmed a proposal that resolves the Administration’s security concerns and settles questions around TikTok’s future in the US. Our plan is extensive and consistent with previous CFIUS resolutions, including working with Oracle, who will be our trusted cloud and technology provider responsible for fully securing our users’ data. We are committed to protecting our users globally and providing the highest levels of security.
Both Oracle and Walmart will take part in a TikTok Global pre-IPO financing round in which they can take up to a 20% cumulative stake in the company. We will also maintain and expand the US as TikTok Global’s headquarters while bringing 25,000 jobs across the country.
TikTok, which has some 100 million active monthly users in the U.S., is owned by Chinese tech giant ByteDance. For months, the Trump administration has been pushing TikTok to sever its ties to ByteDance. Officials in the White House and some Democrats in Washington fear China’s authoritarian regime could access Americans’ data through the app and use the information to blackmail or launch disinformation campaigns.
As part of the deal, Oracle will serve as TikTok’s “secure cloud technology provider” and Walmart will be a commercial partner by entering “into commercial agreements to provide our e-commerce, fulfilment, payments and other omnichannel services to TikTok Global.
Walmart said in a statement:
The President has announced that ByteDance has received tentative approval for an agreement with the U.S. Government to resolve the outstanding issues, which will now include Oracle and Walmart together investing to acquire 20% of the newly formed TikTok Global business.
Based on decades of experience securing the world’s most sensitive data, Oracle’s Generation 2 Cloud fully isolates running applications and responds to security threats autonomously. This unique technology eliminates the risk of foreign governments spying on American users or trying to influence them with disinformation.
In addition to its equity position, Walmart will bring its omni-channel retail capabilities including its Walmart.com assortment, eCommerce marketplace, fulfillment, payment and measurement-as-a-service advertising service
The deal still has to be formally approved by U.S. regulators, but Trump on Saturday told reporters he likes the agreement “in concept” and gives it his blessing, though it still falls short of Trump’s initial ask for TikTok to be sold entirely to a U.S. company.
Apart from the U.S. government the proposed deal will also require approval from Beijing.
Meanwhile, the Trump administration had banned WeChat downloads and transactions on the platform, effective 20th September. However, a judge has blocked the ban on WeChat and allowed the app to temporarily continue operation.
