The approval delays President Trump’s threat to ban a famous Chinese-owned social media app, while the American software giant, Walmart, and others try to complete a deal to get control.
Earlier, Mr. Trump expressed that he had approved a deal between the Chinese social media app TikTok and major American companies, an agreement that will delay the United States government’s threat to block the popular app in the US over national security concerns.
The deal, which must still gain formal U.S. consent will establish a new U.S.-based company, TikTok Global, in which Oracle, an American software maker, and Walmart would own 20 percent, placing more equity in the service into the hands of American companies and investors.
As the deal falls short of an all-out sale of TikTok, whereas it is still considered as a concession by ByteDance, TikTok’s Chinese owner, one that has apparently satisfied the administration’s concerns about China’s ability to harness data from users of the app.
US Department of Commerce, which planned to bar TikTok from U.S. app stores as of Sunday, said that it would delay that plan for one week.
The intensified situation during the earlier weeks over the fate of TikTok underscored the extent to which relations between the United States and China have deteriorated, with their race for technological superiority and their mutual suspicions extending to a social media platform known for silly video clips and a trendsetting, mostly young user base of 100 million people in the United States.
The US President has taken aim at Chinese technology, including WeChat and TikTok, saying that those companies and apps which have ties with China pose a threat to the national security of America and threaten to ban them from the US. The situation worsened in early August, when Mr. Donald Trump issued an executive order mandating that ByteDance strike a deal to sell TikTok’s U.S. operations by Sept. 20, or cease some commercial operations. The second executive order set a later deadline for ByteDance to fully divest from the product.
It evoked US top officials including Treasury Secretary Steven Mnuchin to inject the government of the United States in private-sector discussions about a deal to transfer some control of TikTok to an American company.
These orders persuaded ByteDance to speed up discussions that had already been underway with potential bidders about TikTok’s ownership structure. Oracle, Microsoft, and Walmart were among those that entered talks about acquiring TikTok’s U.S. business.
The agreement between the ByteDance and its investors, which include the U.S.-based General Atlantic, Coatue Management, and Sequoia Capital, would transfer some of their equity control into TikTok Global.
However, it still remained unclear exactly who would control the new entity.