TikTok owner ByteDance has declared it will maintain control of a new company to be established to allow it to operate in the US.
The company noted that the $5 billion payment to the US government mentioned by President Donald Trump was only the estimated tax liability the new business would pay over several years.
In a statement, the Beijing-based company said a partnership agreement with Oracle and Walmart, which was approved by Trump, does not involve the transfer of any algorithms and will see it take an 80 per cent stake in TikTok Global after a funding round within a year, with the remaining shares to be listed to “further enhance the corporate governance structure”.
ByteDance said TikTok, Oracle and Walmart will “resolve the security concerns of the US administration” and questions around its future in the country.
The deal is intended to increase transparency following US scrutiny over national security concerns and avert a shutdown. Oracle will become the data partner and Walmart its commercial partner.
Board members of the new company will comprise Walmart CEO Doug McMillon, ByteDance founder Zhang Yiming and it’s current directors, which includes representatives from major investors Sequoia China and General Atlantic.
ByteDance explained reports it would establish a $5 billion education fund in the US were not related to tax predictions for the new business.
The agreement must be approved by China’s government, with ByteDance requiring a licence covering AI technologies.
Richard Windsor, founder of research blog Radio Free Mobile, said it looks like Oracle and TikTok made just enough concessions to pass the US administration, but these may be too much for China: “I don’t think this deal is a slam dunk to be approved by the Chinese, and so more back and forth might be required.”
The US president signed executive orders in August targeting a ban on TikTok.
ByteDance said it will expand TikTok Global’s headquarters in the US, creating 25,000 jobs.