Doubts emerged on Monday about Oracle’s deal to take over TikTok as US President Donald Trump said he may still renege on his approval and the Chinese government signalled reluctance through state-owned media.
Treasury secretary Steven Mnuchin remains confident that Trump will sign off on the transaction, but US national security officials continue to raise concerns that the data of more than 100 million American users would remain in the hands of a Chinese firm, according to four people familiar with the matter.
US officials are bracing for Trump to reject the deal if it becomes obvious that it doesn’t meet criteria the president himself laid out publicly, they said, speaking on the condition of anonymity. Chiefly, the agreement with Oracle leaves TikTok owner ByteDance as the majority owner of the service, at least until a public offering of the new company created in the deal.
Trump said Monday in an interview on Fox News that he wouldn’t approve the deal if the Chinese company retains control of the new entity, TikTok Global.
For now, Trump has delayed by one week an order that would have shut down TikTok in the US on Sunday. He could keep extending that deadline until the details of the deals are resolved, two of the people said.
“They will have nothing to do with it, and if they do, we just won’t make the deal,” Trump said on Monday, referring to ByteDance. “It’s going to be controlled, totally controlled, by Oracle, and I guess they’re going public and they’re buying out the rest of it — they’re buying out a lot, and if we find that they don’t have total control then we’re not going to approve the deal.”
China’s dignity
Shortly after Trump’s comments, Hu Xijin, editor-in-chief of the China state-affiliated Global Times, tweeted that Beijing would likely reject the deal “because the agreement would endanger China’s national security, interests and dignity”.
The Global Times is a tabloid run by the People’s Daily — the flagship newspaper of the Communist Party. Hu’s tweets are closely watched after accurately forecasting previous moves by China’s government, though his statements at times don’t reflect official policy.
Mnuchin has played a central role in working with TikTok’s Chinese owner, ByteDance, and Oracle. WalMart will also invest in the newly created TikTok Global, should the deal be completed.
The treasury chief has kept Trump apprised of the main points of the deal and has openly laid out its limitations, people familiar with the matter say, though it’s unclear if the president fully grasps how different the final outcome could be from his original demands.
Since August, Trump has said that he wants a full sale of TikTok to ensure that all Chinese access to American data is cut off. He also wanted the federal government to be compensated in some way for making the deal happen.
Instead, the deal that Mnuchin has helped negotiate would leave ByteDance with as much as an 80% share of TikTok Global. Proponents for the deal have said that because of closely held ByteDance’s American investors, Americans would have slightly more than a 50% stake in the new company.
Education fund
Instead of compensation paid directly to the treasury department, as Trump demanded, the deal includes $5-billion for an education fund, according to the president. The details of that element of the transaction remain unclear and as of Sunday were not included in any updated term sheets for the deal, according to people familiar with the matter.
Under the current proposal, there will be five seats on the board of TikTok Global. Walmart CEO Doug McMillon will become a director, the retailer said in a statement. TikTok Global will likely be headquartered in Texas and will hire “at least” 25 000 people, Trump said. — Reported by Saleha Mohsin and Jennifer Jacobs, (c) 2020 Bloomberg LP