Beijing unlikely to approve ByteDance-Oracle deal over TikTok

A successful deal would enable ByteDance to avoid a ban on its popular video sharing app in the US

The proposed deal between ByteDance and Oracle/Walmart over ByteDance's popular video sharing app TikTok is unlikely to get approval from the Chinese government, the state-backed newspaper Global Times said on Monday.

Last week, American firms Oracle and Walmart announced that they had reached an agreement with ByteDance that would soothe President Donald Trump's concerns over TikTok.

As part of the deal, ByteDance will create a US subsidiary, TikTok Global, which will include TikTok's operations in the US and other countries, excluding China. Oracle will own a 12.5 per cent stake in the new company, while Walmart will take a 7.5 per cent stake. The board of TikTok Global is expected to be mainly American (four out of five members), to pacify the White House administration.

"It is clear that these articles (terms) extensively show Washington's bullying style and hooligan logic," the editorial published in China's Global Times stated.

"They hurt China's national security, interests and dignity," it added.

The editorial says the Chinese government is expected to object to the requirement that only one of the five board seats will be reserved for a Chinese national, while the rest will go to Americans.

Beijing could also have issues regarding the requirement that ByteDance would be required to disclose TikTok's source code to Oracle and would separately manage Douyin - TikTok's Chinese equivalent.

"As TikTok and Douyin should have the same source code, this means the U.S. can get to know the operations of Douyin," the editorial continued.

The author also expressed concerns that in future, the US government could target other Chinese firms toperating in the USA.

Earlier on Saturday, Donald Trump announced he had approved the Oracle-TikTok deal "in concept", and it would be "great" if the firms involved were able to reach an agreement.

A successful deal would enable ByteDance to avoid a ban on its popular video sharing app in the US, while also addressing the US government's concerns regarding TikTok's ties to China.

However, the deal now appears to have been complicated following the on-going tussle between ByteDance and Oracle over the ownership of TikTok Global.

On Monday, ByteDance said that TikTok Global would work as its subsidiary and it would own 80 per cent stake in the new company.

Oracle, on the other hand, stated that ByteDance's ownership in TikTok Global would be distributed to ByteDance's investors, many of which are American firms, and that the Chinese company itself would have no stake in the new entity.

US investors own nearly 40 per cent of ByteDance, which means that American firms, including Oracle and Walmart, will directly or indirectly own more than 50 per cent of TikTok Global.

During a television appearance on right-wing talk show Fox & Friends on Monday, President Trump said that ByteDance would not own any stake in TikTok Global, and "If they do, we just won't make the deal."

He added that if the government ever finds that Oracle does not have total control over TikTok, the deal would not be approved.