Oracle has been formally announced as TikTok’s new technology partner and will also become a co-owner of a new entity that will run the made—in-China social network in the USA and other parts of the world. US president Donald Trump has backed the deal publicly.
“Oracle Corporation announced today that it was chosen to become TikTok’s secure cloud technology provider. This technical decision by TikTok was heavily influenced by Zoom’s recent success in moving a large portion of its video conferencing capacity to the Oracle Public Cloud,” said an Oracle statement posted late on Saturday evening US time.
“As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global,” said Oracle CEO Safra Catz. “We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok’s American users, and users throughout the world. This greatly improved security and guaranteed privacy will enable the continued rapid growth of the TikTok user community to benefit all stakeholders.”
That reference to “around the world” reflects the fact that Oracle will be taking a stake in a new entity called “TikTok Global” that will operate TikTok outside China and have majority non-Chinese ownership.
Among the other owners will be retail giant WalMart which said it has: “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,” WalMart’s statement adds, continuing: “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.”
Both Oracle and WalMart note that the transaction needs to be approved by the United States’ Committee on Foreign Investment in the United States. A US treasury announcement about the deal closes by stating that requirement.
But it opens by saying: “The President has reviewed a deal among Oracle, Walmart, and TikTok Global to address the national security threat posed by TikTok’s operations. Oracle will be responsible for key technology and security responsibilities to protect all U.S. user data.”
US-run security and no data going to China have always been US president Donald Trump’s conditions for the deal. The Tweeter-in-Chief also wanted no Chinese company to control TikTok and appears to have got his wish as some of the US and European investors in ByteDance, the Chinese company that created TikTok, will reportedly turn their ByteDance stakes into ownership of TikTok Global. Those investors, plus Oracle and WalMart, will control around 70 percent of TikTok Global.
TiktTok’s tweeted statement below addresses another key Trump pet issue by pledging to bring 25,000 jobs to the USA.
— TikTok_Comms (@tiktok_comms) September 19, 2020
Chinese state media has reported the news but appears to be updating stories about the USA’s Friday ban on WeChat and Tiktok rather than offering a full take on the deal.
China Daily’s report on the new TikTok Global deal therefore includes the following paragraph:
What about the data?
The political aspect of the deal looks like a win for Donald Trump, as he took a Chinese company to the brink and in a very on-brand way made a deal happen while bringing jobs to the USA. Approval of the deal has a deadline of a few days after the US presidential election, so the Tweeter-in-Chief can either use it to boost his re-election chances or an act of spite if he loses.
But Trump’s objection to TikTok was that it sends data to China and today’s news hasn’t explained who will end up controlling that data.
At first glance it appears that TikTok Global will keep it.
Oracle seems content to be TikTok’s cloud and, with Zoom also on its books, to position itself as the cloud of choice for vendors with difficult geopolitical entanglements and also a very fine cloud to host planetary-scale services.
While WalMart’s mention of omnichannel services could bring it closer to the data and potentially signal it could tap it for mutual benefit, it appears to be more interested in becoming TikTok’s preferred marketplace rather than using user data for its own ends.
What is certain is that TikTok users in the USA can keep on posting videos and indulging in some of their signature dances and buying up tickets to Trump campaign rallies to inflate expectations of crowd numbers. ®