ByteDance to walk away from TikTok-Oracle-Walmart deal

Rather than tying up with Oracle and Walmart, ByteDance is instead seeking to restructure TikTok's US operations

ByteDance is reportedly walking away from the proposed sale of TikTok to Oracle and Walmart following Donald Trump's defeat in the US Presidential election, the South China Morning Post says.

China's ByteDance is now looking to restructure its US operations, the newspaper claims, citing 'sources familiar with the matter'.

A source told SCMP that the original deal was designed to 'entertain demands from the Trump administration,' but following Trump's exit from the White House, 'the raison d'être of the deal is gone with him'.

The source added that ByteDance believed selling TikTok's US operations to Oracle would benefit ByteDance if Trump won the election, because Oracle co-founder Larry Ellison was a Trump supporter. However, the Chinese firm lost interest in the deal after Joe Biden's victory.

ByteDance is now said to be working on a new structure for TikTok in the US and is continuing talks with the Biden administration. The new President is in the middle of a broad review of Trump's policies to address potential risks from Chinese firms.

Another source told SCMP that Beijing has finalised certain guidelines for the TikTok deal, although the government has 'no intention of intervening in commercial details, such as whether the price should be a bit higher or a bit lower'.

The Chinese government updated its export control law last year, mandating that ByteDance could not sell its core algorithms to a US company without regulatory approval.

The source said that 'ByteDance can't be seen as kneeling before the US government' on principle.

'It can't set a bad example for other Chinese companies,' the source added.

The Wall Street Journal reported last week that the Biden administration has asked officials to delay the government's appeal of a ruling against the TikTok ban, given by a federal district court judge in December.

In a court filing, the White House administration said it is reviewing the TikTok ban, and that ByteDance had not opposed its request for a delay.

Sources told the WSJ that the most recent discussions between ByteDance and US national security officials have centred on how the Chinese government can be prevented from accessing the information TikTok collects on US users.

TikTok's future in the USA has been in limbo since Donald Trump signed an executive order in August, asking ByteDance to sell TikTok to American firms by mid-November or face a US-wide ban.

The government said it was concerned that the Chinese government could use the app to spy on American users.

In September, Oracle and Walmart said they had reached an agreement with ByteDance that would soothe the administration's concerns.

As part of the deal, ByteDance agreed to create a US subsidiary, TikTok Global, which would include TikTok's operations in the US and other countries, excluding China.

In September, the US District Judge Carl Nichols in Washington issued a preliminary injunction barring the US Commerce Department from ordering Apple and Google to remove TikTok from their app stores for download by new users.

The ruling was the second against the Trump administration's efforts to crack down on Chinese-owned apps.

A federal judge in California had also issued a similar injunction earlier, blocking the government' order to ban Tencent Holdings' WeChat app from US app stores.