UPDATED with Oracle statement, comments by Treasury Secretary Steven Mnuchin, statement by Walmart:
Treasury Secretary Steven Mnuchin told CNBC Monday that the deadline for a TikTok deal was September 20 — not the 15th as widely believed and reported — and said the government will be reviewing Oracle’s bid, lodged formally over the weekend, to become a U.S. technology partner for the popular Chinese-owned social media app.
Mnuchin said the Oracle pact includes a new U.S. headquarters for TikTok and thousands of jobs.
“We did get a proposal over the weekend that includes Oracle as the trusted technology partner with Oracle making many representations for national security issues. There is also a commitment to create TikTok global as a U.S.-headquartered company with 20,000 new jobs,” Mnuchin said. He CFIUS, the Committee on Foreign Investment in the United States, will be reviewing the offer this week “and then we will be making a recommendation to the President and review it with him.”
He declined to reveal other details but he and Oracle clearly defined it as a technology partnership not an outright acquisition of TikTok’s U.S. operations, which rejected suitor Microsoft had been pursuing.
Oracle confirmed Secretary Mnuchin’s statement “that it is part of the proposal submitted by ByteDance to the Treasury Department over the weekend in which Oracle will serve as the trusted technology provider. Oracle has a 40-year track record providing secure, highly performant technology solutions.”
Oracle shares had been up sharply Monday morning on the Sunday reports of a deal and had been halted for trading on pending news — addressed by the company’s statement.
Walmart, which has also been engaging with TikTok, still wants to be part of the process. “Walmart continues to have an interest in a TikTok investment and continues discussions with ByteDance leadership and other interested parties. We know that any approved deal must satisfy all regulatory and national security concerns,” the company said in a statement Monday.
TikTok has been bought by software giant Oracle after the U.S. government forced the parent of the popular meme-making, video-sharing app to sell it to a U.S.-based firm or else have it banned.
The software company beat out Microsoft, whose bid to take over U.S. operations of the app was rejected. Oracle wound up being the favorite, many analysts believe, in large part because founder Larry Ellison is a supporter of President Donald Trump. The White House still has to officially sign off on the deal in order for it to take effect.
Founded by Chinese internet entrepreneur Zhang Yiming, TikTok is owned by ByteDance, a Beijing-based tech giant. TikTok has been a spectacular growth story but has run into a buzzsaw in the form of conflict between the U.S. and China. President Donald Trump and his administration declared the social media platform a security threat. Secretary of State Mike Pompeo and other officials have repeatedly said it is being used to siphon users’ data and compromise the U.S. India had previously banned TikTok, citing similar security concerns.
Oracle will be announced as TikTok’s “trusted tech partner” in the U.S., according to a report in the Wall Street Journal, but the transaction won’t be structured as an outright sale.
“ByteDance let us know today they would not be selling TikTok’s US operations to Microsoft. We are confident our proposal would have been good for TikTok’s users, while protecting national security interests,” Microsoft said in a statement Sunday evening. “To do this, we would have made significant changes to ensure the service met the highest standards for security, privacy, online safety, and combatting disinformation, and we made these principles clear in our August statement. We look forward to seeing how the service evolves in these important areas.”
In early August, Trump had issued an executive order that insisted on the sale, a move most U.S. business historians say has few precedents. There is no antitrust concern in play, given that TikTok competes with SnapChat, Instagram and a host of other social platforms and does not command dominant market share.
Walmart had joined with Microsoft for a bid last month in a move that surprised Wall Street. Most analysts had expected Microsoft to prevail on the merits. Although, like Oracle, its heritage is software, it has acquired communication platforms like LinkedIn and Skype and it has a successful video game division, giving it ways to connect with TikTok’s core teen-age users.
Trump had imposed a September 15 deadline for the deal to be sealed. When negotiations were complicated by technical aspects of disentangling TikTok’s infrastructure from that of ByteDance, the notion of extending the deadline surfaced, but Trump last week insisted the date was firm.
In a lawsuit against Trump’s executive order filed a few weeks ago, TikTok lifted the veil on its dramatic growth. With 100 million monthly active users, the company has risen from 91.9 million in June and more than doubled from the 39.9 million of last October. Since January 2018, the site has surged more than 800% from 11.3 million users, with its global footprint reaching 689 million users across more than 200 countries.
Kevin Mayer, a longtime Disney executive who spearheaded major M&A deals like 21st Century Fox, Marvel and Pixar before leading the launch of Disney+ last fall, jumped to TikTok as CEO earlier this year. That stunning news came after Mayer lost out on the CEO job in favor of Bob Chapek. But Mayer did not last even three months as TikTok’s CEO, explaining to Yiming and employees that he hadn’t anticipated the severity of the storm that would blow up around the company.
While TikTok was built on the breezy site Music.ly, it has branched out from its initial sweet spot of dance videos to become a factor in recent protests against racial injustice. It also had ambitions to compete with SnapChat, Twitter and other social giants in the advertising space, convening a presentation for buyers during the NewFronts in the spring.
TikTok also played a memorable role in an episode that embarrassed the Trump presidential campaign in June. When thousands of ticket requests for a Trump rally in Tulsa circulated on TikTok, campaign officials boasted about likely record-setting attendance and even set up an overflow area next to the arena. It turned out the buzz was vastly exaggerated, the ticket demand an elaborate prank. Only a few thousand attended the rally and TV cameras showed thousands of empty seats.