Oracle (ORCL) And Walmart (WMT) Receive Tentative Government Approval For TikTok

By Amit Chowdhry ● September 20, 2020
  • Oracle (NYSE: ORCL) and Walmart (NYSE: WMT) will invest to acquire 20% of TikTok Global business as President Donald Trump offers tentative approval for an agreement

President Donald Trump announced that ByteDance has received tentative approval for an agreement with the U.S. government to resolve the outstanding issues. As a result, Oracle (NYSE: ORCL) and Walmart (NYSE: WMT) will together invest to acquire 20% of the newly formed TikTok Global business.

With this deal, TikTok is creating a new company called TikTok Global that will be responsible for providing all TikTok services to users in United States and most of the users in the rest of the world. The Trump administration also conditionally approved a deal where Oracle becomes TikTok’s secure cloud provider.

Going forward, TikTok Global is going to be majority owned by American investors, including Oracle and Walmart. And TikTok Global will be an independent American company, headquartered in the U.S., with four Americans out of the five member Board of Directors. Walmart CEO Doug McMillon is expected to be one of those board members.

All of the TikTok technology will be in possession of TikTok Global and comply with U.S. laws and privacy regulations. And data privacy for 100 million American TikTok users will be quickly established by moving all American data to Oracle’s Generation 2 Cloud data centers.

Oracle’s Generation 2 Cloud fully isolates running applications and responds to security threats autonomously. And this technology eliminates the risk of foreign governments spying on American users or trying to influence them with disinformation.

Along with its equity position, Walmart will bring its omni-channel retail capabilities including its Walmart.com assortment, eCommerce marketplace, fulfillment, payment and measurement-as-a-service advertising service. And TikTok Global is expected to create more than 25,000 new jobs in the Unites States and TikTok Global will pay more than $5 billion in new tax dollars to the U.S. Treasury.

TikTok Global — together with Oracle, SIG, General Atlantic, Sequoia, Walmart and Coatue — will create an educational initiative to develop and deliver an AI-driven online video curriculum to teach children from inner cities to the suburbs, a variety of courses from basic reading and math to science, history and computer engineering.

TikTok Global is going to have an Initial Public Offering (IPO) in less than 12 months and be listed on a U.S. Exchange. And after the IPO, U.S. ownership of TikTok Global will increase and continue to grow over time.

As part of the agreement, TikTok Global will able to continue to provide a hundred million Americans with access to the social network they love, and spark much needed competition in the market for social networks.

KEY QUOTES:

“TikTok picked Oracle’s new Generation 2 Cloud infrastructure because it’s much faster, more reliable, and more secure than the first generation technology currently offered by all the other major cloud providers. In the 2020 Industry CloudPath survey that IDC recently released where it surveyed 935 Infrastructure as a Service (IaaS) customers on their satisfaction with the top IaaS vendors including Oracle, Amazon Web Services, Microsoft, IBM and Google Cloud …. Oracle IaaS received the highest satisfaction score.” 

— Oracle Chief Technology Officer Larry Ellison

“As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global. Oracle will quickly deploy, rapidly scale, and operate TikTok systems in the Oracle Cloud. 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.”

— Oracle CEO Safra Catz