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Tiktok: Deal with Walmart and Oracle saves US business of App

The fuss about the popular video app Tiktok and its US business is now taking a positive turn for the company. Developer Bytedance seems to have gotten his head out of the noose. An effective deal with two large US companies makes it possible.

Download stop prevented

Until the end it was exciting, how the future of Tiktok in the USA would look like. When U.S. President Trump and his Department of Commerce announced a download stop for Tiktok in Apple‘s AppStore and Google‘s Play Store, developer Bytedance already saw his fight for continued existence in the USA as lost. From Monday, September 21st, the app was to disappear from both platforms. But now Trump has announced that he has approved a deal between Tiktok owner Bytedance and two US companies. Even though Tiktok seems to be saved, a formal cancellation of the measures announced for Monday is still pending. For the time being, however, they have been postponed by the Ministry of Commerce for one week. Trump has not let much get through to the deal. But he said that in the future Tiktok’s worldwide business would be transferred to a new company based in the USA. Here he said that the company headquarters would “probably be in Texas”.

Trumps fear of Tiktok

In an official justification for the ban of the popular app, the US president spoke of a threat to national security. Trump always assumed that there was close contact between developer Bytedance and the Chinese government. In the context of this possible cooperation, he feared that sensitive data of U.S. citizens could end up in Chinese hands. Due to this security risk, Trump issued two orders that would mean the end of the app in the USA. Tiktok’s statements ran completely contrary to those of the incumbent US president. Developer Bytedance always said that the collected data would not leave the servers in the USA.

Oracle is the new master of the data

The software company Oracle is now responsible for data security, which is so important to President Trump. It is a US company that has received approval from the US president for a deal with Bytedance. Oracle’s task in the future will be not only to provide workmanship for the data of US users, but also to create the basis in the form of technical systems. This deal should also have positive economic consequences for the country. For example, Oracle and Tiktok will create a total of 25,000 new jobs as part of their cooperation.

An expensive fun for Oracle and Walmart

But it was obviously not an easy way to get a deal. After all, Trump was demanding other things besides data security. So it was a big concern to him that the majority of the company Tiktok is held by US investors. So far we know only of 20 per cent, which hold US enterprises at Tiktok global . 12.5 percent are Oracle, 7.5 percent are supermarket giant Walmart. The shares are to buy both companies in the context of the IPO of Tiktok Global. This will by no means be a bargain. Developer Bytedance, for example, has announced that they are aiming for a total valuation of an impressive 60 billion US dollars. This would mean that Walmart and Oracle would have to spend 12 billion US dollars together. Whether this will be the final price is questionable. After all, there are still negotiations to be held on this. Both Oracle and Walmart are in a good position. After all, only an effective deal means that Tiktok is not threatened with an end in the USA.

The majority belongs to Tiktok, but…

But this means that US companies hold just 20 percent of the Chinese company. The remaining 80 percent still belong to Bytedance. However, this must be put into perspective. After all, Bytedance is owned to a certain percentage by other US companies. For example, start-up financiers like General Atlantic hold a total of almost 40 percent of the developer Bytedance. Accordingly, Trump’s demand corresponds to reality. The majority of Tiktok is in US American hands. According to Trump, Tiktok will be “a completely new company in the future. It will have nothing more to do with China.

Supermarket giant Walmart will also play a major role for Tiktok in future.

Chinese restrictions are bypassed

The Chinese government is anything but pleased about the efforts of the developer Bytedance to have Tiktok bought by US companies. Accordingly, China has recently tightened its restrictions on sales of domestic companies abroad. For example, companies that rely on special algorithms for data processing are not allowed to sell on their business. Government approval is required. Here it becomes clear why Trump wants to see the majority of Tiktok on the US side. Finally Bytedance might decide then freely whether one would like to sell Tiktok or not.

Tiktok pays high-priced education fund

The app, which primarily focuses on more or less entertaining short videos, is especially popular among young people. Accordingly, Bytedance already wants to establish a good reputation with the American youth and their parents. After all, the company is now to transfer a total of five billion US dollars to a Texas education fund. Trump made this announcement during a pompous election campaign appearance in North Carolina. This is a kind of forced thank you to the US government for bringing about the deal. However, the sense and purpose of the high-priced fund is more than questionable. After all, it is supposed to serve as a financial injection for a school education that is far more patriotic than it has been so far. Trump literally wants “the real history of our country to be taught”. For example, a key aspect of the small-scale educational reform would be to contain the large scale of the subject of “slavery in the United States”.

Oracle boss Larry Ellison is an avowed fan of US President Donald Trump.

The companies have not been chosen at random

It comes as a surprise that Oracle and the supermarket giant Walmart have now been awarded the contract for Tiktok. After all, in the many weeks of “back and forth” with Tiktok and the US government, many other companies were interested in buying. All in front the deal between Microsoft and Bytedance seemed already as good as safe. In the end, however, this deal must have failed due to excessive costs. But also other companies like the Amazon subsidiary AWS or Twitter were interested in a purchase. Both companies were also quickly out of the race. Here, speculation is certainly possible. After all, both Microsoft founder Bill Gates and Amazon boss Jeff Bezos are anything but fans of US President Trump. The short news service Twitter has also taken action several times in recent weeks against unobjective tweets from the president. In contrast, Oracle boss Larry Ellison is one of the few Silicon Valley celebrities who publicly acknowledge their sympathy for Trump. In addition, Walmart is a major competitor of the online mail-order giant Amazon. A rogue, who thinks bad thereby…

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Simon Lüthje

I am co-founder of this blog and am very interested in everything that has to do with technology, but I also like to play games. I was born in Hamburg, but now I live in Berlin.

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