TikTok has said it will separate itself from its Chinese parent company, ByteDance, and become an independent entity called TikTok Global – with Oracle and Walmart both taking minority stakes.
In a deal that US President Donald Trump gave his blessing to over the weekend, US multi-tech company Oracle would become TikTok’s new cloud provider, while retail giant Walmart would offer its “omni-channel retail capabilities,” the companies said.
“It’ll be a brand new company. It will have nothing to do with any outside land, any outside country, it will have nothing to do with China,” Trump said.
But in a statement released on September 21st, ByteDance seemed to contradict Trump, and insisted it was not losing control of its video-sharing app.
The company said it plans to carry out a round of pre-IPO financing that will give ByteDance an 80 per cent stake in TikTok Global. As part of the deal, Oracle, Walmart and ByteDance agreed to list TikTok Global on an American stock exchange within 12 months. Because 40 per cent of ByteDance is owned by US venture capital firms, the Trump administration can technically claim TikTok Global is now majority owned by US money.
Additionally, Oracle will get to cast an eye over the source code for TikTok, but ByteDance said it will not be transferring algorithms or technology to the US firm.
Meanwhile, a US judge has blocked a government attempt to ban the messaging and payments app, WeChat, which is always owned by a China-based company – Tencent.
US Magistrate Judge Laurel Beeler said the ban raised serious questions related to the constitution’s first amendment, guaranteeing free speech. The Department of Commerce had announced a bar on WeChat appearing in US app stores from September 20th.
Responding to the news, eMarketer analyst at Insider Intelligence Shelleen Shum, commented: “While we expect that some Wechat users in the US will find ways to continue using the app, the inconvenience of doing so and the diminished functionality will give impetus for users in the US to shift to other alternatives where possible, hence resulting in decreased usage over time. We do not expect any significant impact to Weixin users in China because of this ban in the US. eMarketer estimates that Weixin has over 700 million unique MAUs in China and its strong network effect within the country will maintain the app’s popularity.”
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