Trump administration approves Oracle-TikTok deal in principle

The Trump administration has in principle approved a proposal from TikTok, Oracle and Walmart that will stop the short form video platform from being shutdown.

“I have given the deal my blessing,” President Trump told reporters Saturday. “If they get it done, that’s great, if they don’t, that’s okay, too. It’s a great deal for America.”

Shortly after the president’s comments, Oracle confirmed that it had been chosen as TikTok’s secure cloud provider. The deal would create a new TikTok Global entity that would be headquartered in the United States. Trump told reporters that it will likely be located in Texas.

TikTok spokesperson Josh Gartner told The Hill that Oracle will be responsible for hosting all American user data and “associated computer systems” to address U.S. national security concerns.

“We are currently working with Walmart on a commercial partnership, as well,” Gartner added.

Oracle and Walmart will be able to take up to a 20 percent cumulative stake in the company, Gartner said. Oracle said in a press release Saturday that it will take a 12.5 percent cumulative stake in the new company.

The Treasury Department confirmed Saturday that the deal has been reviewed but is pending approval.

“Approval of the transaction is subject to a closing with Oracle and Walmart and necessary documentation and conditions to be approved by CFIUS,” spokesperson Monica Crowley said in a statement, referring to the interagency Committee on Foreign Investment in the United States.

TikTok’s China-based parent company ByteDance submitted a proposal to the Treasury last weekend, both TikTok and Oracle said.

Reports emerged throughout the week about the contours of the deal, pointing to the size of American companies’ stake in TikTok as the main sticking point.

The new partnership comes just days before the deadline for divestiture set by an executive order signed by Trump last month.

The order argued that the wildly-popular apps’ ties to China posed a national security threat, based on a review by CFIUS.

The Department of Commerce on Friday issued an order against TikTok – as well as Chinese-owned messaging platform WeChat – which would have blocked it from being carried in American app stores starting Sunday and blocked all transactions with ByteDance entirely on Nov. 12.

It is unclear how the deal approved Saturday would address many of the national security concerns that were used to justify the executive order.

Many lawmakers, including Republican senators, raised concerns this week that the deal would still leave American’s data vulnerable because of the continued involvement of ByteDance.

Trump told reporters Saturday that TikTok will be “totally controlled by Oracle and Walmart.” A source familiar with the deal called that “definitely false,” pointing to the 20 percent stake ceiling that was outlined in TikTok’s statement.

If finalized, the deal would be a huge boon for Oracle; TikTok has been downloaded nearly 200 million times in the U.S., according to data provided to The Hill by SensorTower, and provides an entry point to the coveted youth market for Oracle.

Microsoft appeared in pole position to secure a deal when Trump’s executive order was first signed, but ultimately had its proposal rejected by ByteDance last Sunday.

Oracle and the administration have a number of close ties.

Oracle co-founder Larry Ellison, whom Trump called a “tremendous person” Tuesday, hosted a fundraiser for the president earlier this year.

Safra Catz, Oracle’s CEO, was part of Trump’s transition team in 2016 and was reportedly floated to join his cabinet.

The company’s D.C. top lobbyist, Ken Glueck, was also on Trump’s transition team.

Beijing can still reject the agreement.

Shortly after Trump’s executive order, the Chinese Communist Party updated its export controls to include artificial intelligence technologies that likely include the TikTok algorithm, potentially giving Chinese officials the power to limit the algorithm’s use outside the country.

Trump said Saturday that as part of the deal, TikTok would “be making about a $5 billion contribution towards education. We’re going to be setting up a very large fund for the education of American youth.”

Neither TikTok nor Oracle’s statements included any mention of such a fund.

Trump had suggested earlier on in negotiations that the Treasury Department should collect a payment in any deal before ultimately backing down from that position this week, admitting that the administration had no authority to make that sort of demand.

Updated: 8:10 p.m.