The acquisition of Chinese short video sharing app TikTok is a fast-changing case. In the last two days, the deal, which was originally “blessed” by US President Donald Trump, has been overshadowed by a number of different claims.
In an editorial published on Tuesday (September 22), the Global Times, China’s official media, called the proposal an “unequal treaty” that demonstrates Washington’s “bullying and bandit logic” and “undermines China’s national security and dignity. “
The Global Times is responding to successively contradictory comments from parties involved in the deal.
TikTok’s parent company, ByteTap, responded on Monday morning to criticism in China that the Beijing-based tech company is knee-deep in the U.S. over the TikTok deal. TikTok Global plans to list on the U.S. stock market within a year, a move that will “further strengthen its corporate governance structure and transparency,” the company said in a statement, noting that byte jumping still holds an outright controlling stake in the new company it plans to form.
The statement said that even with the removal of a small portion of the IPO financing, ByteDance still holds an 80 percent controlling stake in the new company.
However, the U.S. firm Oracle, which participated in the deal, said something quite different. Oracle Executive Vice President Ken Glueck said in a statement Monday that “after TikTok Global is formed, Oracle and Walmart will inject capital, and TikTok Global’s equity will be distributed among shareholders,” and that “U.S. investors will be in the majority and ByteDance will not be. Holding in TikTok Global”.
In addition, the attitude of President Trump, who has been leading the deal, has also changed. On Monday, Trump stressed that control of the new company must remain in the hands of American businesses.
In an interview with Fox News TV, Trump made it clear that he would not approve the proposed deal if Byte Jump is still controlled by its parent company.
Trump said he wants Walmart and Oracle to have “full control of TikTok’s U.S. business” and that “Byte Jumping will have nothing to do with the new company.
Trump categorically stated, “We will not make such a deal.
On September 14, U.S. Treasury Secretary Mnuchin confirmed that the Treasury Department had received a proposal for a deal struck by TikTok, Oracle, Walmart and Byte Jump, and that the U.S. government would review the deal and consult with relevant parties on the details of the proposal.
Trump then also sent positive signals about the approach, saying that he agreed to the deal in principle and gave his “blessing” to the deal.
According to information previously released by the parties, the TikTok deal proposal, which is currently under review by the U.S. government, includes the following main elements: TikTok will form a new company, TikTok Global, to develop international markets. In about a year, the new company plans to go public in the U.S. stock market, with Oracle owning 12.5% and Wal-Mart 7.5%, or about 20% in total. The remaining 80% is held by Byte Jump, but half of that comes from other U.S. investors. So, the U.S. companies actually hold more than 50% of the shares, while Byte Jump’s stake is just under 50%.
The new company will be headquartered in Texas, USA, and plans to grow to 25,000 employees.
The Global Times commented that China would never approve such a deal. The commentary said the United States is overconfident and underestimates China’s determination to defend its interests.
Reuters reported on Tuesday that the Chinese government has largely refrained from commenting directly on the details of the deal, except for the Chinese Foreign Ministry’s frequent calls to the U.S. government to provide a fair and non-discriminatory business environment for foreign companies.
However, last month the Chinese government revised its technology export control list to include algorithm technology in the backend of the TikTok application. As a result, the deal will eventually have to be approved by both the United States and China before it can take effect. This adds a new layer of difficulty to the deal.
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