This past weekend saw a flurry of activity in the on-going saga to sell the U.S. operations of TikTok, the video-streaming app that the Trump administration has threatened to ban if it’s not sold to a U.S. entity. Now, the tentative weekend agreement to save the app from a U.S. ban appears to be hanging by a thread.
On Saturday, U.S. President Donald Trump said he had given his “blessing” to a deal between TikTok’s Chinese parent company ByteDance and two U.S. corporations: technology firm Oracle and retail giant Walmart. The deal would reportedly not be an outright sale, but would rather make Oracle and Walmart strategic partners of ByteDance, with Oracle acting as steward of TikTok’s American user data.
In the deal, Oracle and Walmart would reportedly purchase 12.5% and 7.5% stakes, respectively, in TikTok Global, a new ByteDance subsidiary with a value as high as $60 billion that ByteDance plans to take public in the next 12 months.
Interim TikTok CEO Vanessa Pappas declared in a video on Sunday: “We’re here to stay.”
“We are pleased that the proposal by TikTok, Oracle, and Walmart, will resolve the security concerns of the U.S. Administration and settle questions around TikTok’s future in the U.S.” a TikTok spokesperson told Fortune on Monday. “We’re thrilled that we will be able to continue serving our amazingly diverse and creative community.”
In a joint Sunday statement, Oracle and Walmart called it a “landmark deal” that would create 25,000 new jobs in the U.S. The statement also said that Americans will hold four of the five spots on TikTok Global’s board of directors, which may include Walmart’s chief executive Doug McMillan and ByteDance CEO Zhang Yiming.
But suddenly, the prospect of a deal turned sour.
On Monday, Trump backtracked from his initial “blessing’” of the deal due to concerns that ByteDance would retain control over TikTok Global.
And on Tuesday, Chinese state media sources said the Chinese government would reject any attempts to diminish ByteDance’s control over TikTok Global.
At the moment, the two sides of the deal—the Trump administration, Oracle, and Walmart on one hand; Beijing and ByteDance on the other—are at loggerheads over whether the new TikTok Global will be majority Chinese- or American-owned, and that sticking point is threatening to derail what, just a day ago, seemed like a done deal.
The initial proposal “seemed like a clear win for Beijing,” says Brock Silvers, former chief investment officer at Adamas Asset Management in Hong Kong, but the U.S.’s new concerns over TikTok Global control, access to TikTok’s algorithm, and an education program touted by President Trump threaten to derail the tentative agreement.
“The deal could go either way,” Silvers says. “The odds of a renegotiation or rejection have increased over the last day or two.”
Over the weekend, Oracle claimed that the TikTok deal would see American shareholders control about 53% of TikTok Global’s shares because U.S. firms like Sequoia, General Atlantic, and Tiger Management control 40% of ByteDance, TikTok’s parent.
On Monday, Oracle Executive Vice President Ken Glueck doubled-down on Oracle’s position, saying in a statement to reporters that once Oracle and Walmart invest in TikTok Global, the new company’s shares “will be distributed to their owners,” which will leave “Americans” as “the majority.” ByteDance, he said, “will have no ownership in TikTok Global”
On Monday, ByteDance published an article on the Chinese website toutiao aimed at dispelling the “rumor” that TikTok Global would be controlled by American investors. ByteDance said on Monday that it would retain an 80% stake in TikTok Global and keep control over the technologies and algorithms that power the app.
The deal came under further threat when Trump told Fox News on Monday that U.S. regulators may not approve of a deal that didn’t meet Oracle’s standards for U.S. ownership.
“[Oracle is] going to own the controlling interest. Everything is going to be moved into a cloud done by Oracle…and it’s going to be totally controlled by Oracle,” Trump said. “If we find that they don’t have total control, then we’re not going to approve the deal.”
Jeffrey Towson, a private equity investor, said Oracle’s claim that U.S. investors would have a majority stake in TikTok Global is “technically true, but patently false.” Towson said it doesn’t matter if American investors own 40% of ByteDance; that stake doesn’t give them control over how ByteDance—or TikTok Global by proxy—would operate. As ByteDance’s minority owners, they would not be guaranteed a say in ByteDance’s decision making, he said.
As of now, it remains unclear whether Oracle and ByteDance have agreed to a structure that would cede more of TikTok Global’s potential shares to American ownership. On Tuesday, ByteDance said it had no further comment regarding its negotiations with Oracle.
But Trump’s new demand on Monday that TikTok Global be fully controlled by U.S. investors suggests that the weekend deal didn’t ensure that.
Another, perhaps more minor, area of disagreement emerged on Monday when ByteDance said it was unaware of an agreement that Trump touted that would see the companies involved in the deal contribute to a $5 billion ‘education’ fund.
At a Saturday campaign rally, and in a call with top executives from Walmart and Oracle the same day, Trump raised the idea of including the fund as part of the deal. He told supporters at the rally that he’d asked the leaders of the companies involved to put “$5 billion into a fund for education, so we can educate people as to real history of our country.” He added, “that’s their contribution that I’ve been asking for.”
ByteDance denied it had agreed to Trump’s education fund, and responded by saying it was “committed to investing in the education field” and plans to “launch online classroom projects based on A.I. and video technology for students around the world.”
Towson says that the deal proposed this past weekend still makes ByteDance the final decision maker in terms of how TikTok Global content is moderated and whether or not, for example, political advertising is allowed on the platform. Right now, Towson says, the fact that TikTok’s editor-in-chief “appears to be ByteDance” may still present problems with U.S. regulators.
The China wildcard
There is also no guarantee that the Chinese government will sign off on a deal.
In August, the Chinese government introduced restrictions on Chinese companies on exporting artificial-intelligence technology, meaning that Chinese regulators will likely have to review the deal following approval in the U.S.
Lindsay Gorman, fellow for emerging technologies at The German Marshall Fund of the United States, says that Beijing would likely approve of a deal that provided ByteDance with majority ownership of TikTok Global and control over the algorithm that powers the app.
The ability of ByteDance to retain control of TikTok would be “big win for Beijing,” Gorman said “especially if it quiets national concerns among U.S. policymakers.”
Now, with the U.S. government pushing for more control over TikTok Global on Monday, China’s approval may be on shakier ground.
On Monday, China’s foreign ministry spokesperson Wang Wenbin said at a press conference that China would not comment on whether it would approve of a potential deal between ByteDance, Oracle, and Walmart. In response to the question, he said China urges the U.S. to “respect the principles of market economy and fair competition” and to “stop politicizing normal trade and economic cooperation.”
Hu Xijin, the editor of the pro-Beijing tabloid the Global Times, suggested that Beijing’s approval of the deal is far from certain. As a top news editor in China, Hu claims to have access to high-level Chinese government sources, but he has a mixed record in predicting China’s official responses to U.S. actions.
“Based on what I know, Beijing won’t approve current agreement between ByteDance, TikTok’s parent company, and Oracle, Walmart, because the agreement would endanger China’s national security, interests and dignity,” Hu Xijin tweeted on Monday evening Beijing time, as reports emerged that U.S. authorities were pushing for more control over TikTok Global.
As of now, the only thing that appears clear is that the TikTok saga isn’t yet over.