Trump approves Oracle and Walmart takeover of TikTok

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Tiktok

One of the biggest pieces of business news that investors are following is the acquisition of TikTok, perhaps the fastest-growing social media platforms out there. Due to its Chinese ownership, the Trump administration has mandated the company either sell off its business to U.S. buyers or risk getting shut down completely over data privacy issues. It seems that Trump has now officially approved Oracle and Walmart as the two companies that will own a significant stake of TikTok after all.

While not surprising, as most analysts were expecting Trump to go ahead with the deal, official confirmation was announced over this weekend. While the President emphasized that this new entity would be a new entity altogether that would be divorced from Chinese authorities. However, there appears to be a bit of confusion on the topic, with ByteDance potentially keeping all of its proprietary algorithms for itself instead of sharing it with American companies.

It’ll be a brand-new company. It will have nothing to do with any outside land, any outside country, it will have nothing to do with China,” said President Trump in a statement this weekend. However, ByteDance ended up issuing a contradictory statement a bit later. “The current plan does not involve the transfer of any algorithms and technologies. Oracle has the authority to check the source code of TikTok USA,” said the Chinese company according to one translation.

While it might seem similar to a layperson, looking through the source code isn’t quite the same as dealing with the underlying algorithms and technologies used by ByteDance’s TikTok platform, which is a major reason behind its success. Source code inspections are fairly common when data privacy is a concern, so it’s a pretty standard response from ByteDance to allow this for their U.S. buyers.

ByteDance also confirmed that it would be doing a small round of pre-IPO financing, with Oracle and Walmart saying that they are working towards a public listing of TikTok sometime within the next 12 months.

Despite the news, shares of Oracle haven’t responded much to the news. The company’s stock has remained relatively the same over the past week in spite of the news that it stood a strong chance of winning the TikTok bidding process. Walmart’s stock, which has done exceptionally well so far in 2020, is also relatively unmoved in comparison to last week.  Time will tell whether or not this will help push either company’s stock price higher in the near future, although the response so far hasn’t been as significant as some would have expected.

 

Walmart Company Profile

America’s largest retailer by sales, Walmart operates over 11,300 stores under 58 banners, selling a variety of general merchandise and grocery items. It’s home market accounted for 76% of sales in fiscal 2019, with Mexico and Central America (6%), the United Kingdom (6%), and Canada (4%) its largest external markets. In the United States, around 56% of sales come from grocery, 33% from general merchandise, and 11% from health and wellness items. The company operates several e-commerce properties apart from its eponymous site, including Flipkart, Jet.com, and shoes.com (it also owns a roughly 10% stake in Chinese online retailer JD.com). Combined, e-commerce accounted for about 5% of fiscal 2019 sales. – Warrior Trading News

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