ByteDance Ltd. is working with U.S. regulators to address pending security concerns over the proposed sale of a stake in the music video app TikTok, and the companies involved are preparing to drag out the approval process after the well-known election after November’s The Thing.
Oracle Corp., which leads the offer to buy a stake in TikTok, has also worked out the fine print of the contract that was confirmed as “in concept” two weeks ago by US President Donald Trump, but is skeptical of others within his administration and from the Chinese government.
ByteDance is currently discussing a final proposal with the US Foreign Investment Committee, or Cfius, the regulator that needs to clarify an agreement. Several issues remain unsolved, including questions about data security, Chinese ownership of the new TikTok Global, and a possible $ 5 billion education fund. Trump has said that if a deal isn’t closed before November 12, TikTok in the US will be closed. However, it is possible that the deadline could be changed if negotiations are still underway for next month.
The process is slow moving in part due to the amount of details that need to be ironed out, said some of the people who asked not to be identified, and discussed the private negotiations. In addition, TikTok Global’s fate has fallen on the priority list of the president seeking approval for a new Supreme Court justice and focusing on his re-election campaign, some of the respondents said. The process is now even more complicated following the president’s diagnosis of Covid-19, announced early Friday.
A TikTok representative declined to comment, while Oracle did not immediately respond to a request for comment. Cfius does not confirm, deny, or comment on his work.
TikTok was forced to begin talks on a deal through two bans Trump issued in August because ByteDance posed a national security risk and put the app at the center of the president’s confrontation with Beijing. ByteDance is fighting against orders from the US government while trying to push through a deal. A federal judge temporarily blocked a proposed White House ban on TikTok in U.S. app stores on Sept. 27, claiming the Trump administration had exceeded its authority in calling for removal.
The agreement on the table came about last month, calling on Oracle and Walmart Inc. to take minority stakes in TikTok Global and four of the company’s five board members to be US citizens. This proposal opposed an offer from Microsoft Corp. by acquiring all of TikTok’s US assets.
As part of the discussed plan, all board votes will be weighted equally, said a person familiar with the matter, which means that no single board member will have a greater influence than others.
Walmart has announced that Chief Executive Officer Doug McMillon will hold one of these directorships. The retail giant is likely to play a more active role in TikTok’s products and features than some other investors. Walmart has touted “trade deals” with TikTok, and both sides are discussing how Walmart and TikTok features can be integrated into each other’s apps. Walmart declined to comment on the recent discussions.
Oracle is not expected to have a seat on the board. The software manufacturer’s role is more specific to TikTok’s data storage and security, but the company is not expected to have a role in the company’s day-to-day business or product operations, some of the people said.
Still, some of the most fundamental aspects of business seem undecided. While Oracle and Walmart have announced that they will collectively acquire a 20% stake in the new TikTok entity, Trump and Oracle have both claimed that the deal will not move forward if the resulting company has a Chinese stake. ByteDance, meanwhile, plans to hold an 80% stake in the new company, and there are indications that the Chinese government will only approve a deal if ByteDance retains a majority stake.