The White House isn’t saying much about a deal on TikTok, which President Trump announced earlier today after his phone call with Chinese President Xi.
But the Washington Post has some details on the deal, including how Larry Ellison’s Oracle will be a part-owner of a US spin-off version of TikTok, and provide cloud computing and tech services.
A consortium of investors will own 50% of the new spin-off. However, ByteDance will still own the algorithm, which will be supervised by leadership of the new spin-off version to protect user data.
Here’s more from WAPO:
TikTok has gotten a green light to spin off a new entity in the United States under different ownership as part of a long-awaited deal designed to sidestep a legally mandated ban of the wildly popular video app nationwide.
The approval came Friday after President Donald Trump and Chinese President Xi Jinping concluded a call on which they discussed the app, which has 170 million U.S. users and is currently owned by the Chinese tech giant ByteDance.
The Chinese government, which had criticized a potential sale, said it welcomed businesses to “conduct commercial negotiations based on market rules” and that it believed the U.S. would support “the consultations between the two teams to properly resolve the TikTok issue,” Chinese state media reported.
In a Truth Social post shortly after, Trump said he and Xi had “made progress on … the approval of the TikTok Deal,” but neither he nor White House spokespeople provided any details. Trump said he would meet with Xi at a summit in South Korea starting late next month and would visit China early next year.
A ByteDance spokesperson in a statement Friday thanked Trump and Xi and said the company would work “to ensure TikTok remains available to American users through TikTok U.S.”
The arrangement punts many of the thorny questions about TikTok’s future structure to ByteDance and American investors, and any arrangement that allows ByteDance to retain control of the algorithm could draw legal challenges in the United States. Throughout his second term, Trump has frequently declared he has secured trade deals before key provisions were finalized.
The agreement could benefit some of Trump’s top allies, including Larry Ellison, the billionaire co-founder of Oracle, a tech giant that will own a stake in the U.S. spin-off and provide it cloud-computing and technical services, according to details of the deal shared by two people familiar with the arrangement, who spoke on the condition of anonymity because they were not authorized to discuss the negotiations. Oracle did not immediately respond to request for comment.
The full terms of the arrangement have not been disclosed, and closing the deal could take weeks, the people said.
One of the people said the algorithm’s use in the U.S. would be supervised by the spin-off’s leadership and meet all security requirements. Oracle currently hosts Americans’ TikTok data on its servers in Texas and reviews the code for potential security flaws.
But critics have said that deal would allow the algorithm to still be misused to promote Chinese propaganda, one of the main concerns that animated the sale-or-ban law passed last year by Congress and upheld by the Supreme Court.
That’s “not a clean break, it’s a loophole,” said Craig Singleton, a fellow at Foundation for Defense of Democracies, a conservative think tank in Washington.
ByteDance will shrink its ownership to just below 20 percent of the spin-off as part of an attempt to resolve concerns that the Chinese government could access Americans’ user data or shape what they see online.
A consortium of new investors will own 50 percent, including Ellison’s tech giant Oracle and the private equity firm Silver Lake, the two people said.
Institutional investors who currently hold stakes in ByteDance will own 30 percent, including General Atlantic, KKR and Susquehanna International Group, whose co-founder Jeff Yass gave millions to support Trump’s reelection campaign.