What you need to know about the TikTok deal

A TikTok deal with Oracle and Wal-Mart would value the video app at $60B. More broadly, the deal likely marks the end of the open internet.


September 21, 2020

At this point, it would be tech media malpractice to not write about TikTok.

So, here’s the update: On Saturday evening, TikTok tweeted a video of Vanessa Pappas — the firm’s interim head — with the text “#WeAreTikTok and we are here to stay!”

The US government has agreed in principle to a deal

Under the agreement, Oracle and Walmart would take minority stakes of 12.5% and 7.5%, respectively, in TikTok Global (all markets ex-China).

This 20% stake in TikTok would reportedly cost $12B, valuing the video app at $60B — nearly as much as Snap ($35B) and Twitter ($32B) combined. In total, US investors will directly or indirectly own 53% of the firm.

Per Walmart, the deal may also create 25k US jobs and $5B in tax revenue. TikTok Global will be “an independent American company, headquartered in the US,” with 80% of its 5-person board composed of US citizens.

What are Oracle and Walmart actually going to do?

Oracle would be TikTok’s cloud provider (“trusted tech partner”) and be given access to the firm’s source code to ensure US consumer privacy.

There’s been confusion as to what Walmart will actually bring to the table other than “yo, Larry called and said we should totes do this deal.”

The company cites its omnichannel retail chops (including fulfillment and payments), suggesting TikTok Global wants to take its ecommerce ambitions to the next level.

The straw that broke the open internet’s back

China began censoring its internet in 1997. Today, thousands of international domains are blocked from the country’s internet: Google, YouTube, Facebook, Wikipedia, Reddit and Instagram, among others.

As noted by Quartz, the structure of the TikTok deal mirrors similar agreements that foreigners have struck to operate in China. For example, Apple currently stores Chinese user data within China’s borders.

A hawkish US cyber sovereignty position will further erode the notion of an open internet … likely with unforeseen long-term business and geopolitical implications.

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