ByteDance has agreed to list TikTok on the US stock market at some point after its proposed partnership deal with US software group Oracle, as part of its efforts to satisfy the Trump administration’s national security concerns with its video sharing app.
People with direct knowledge of the matter said that an initial public offering (IPO) in the United States – not in China or Hong Kong – was one of the many commitments the Chinese owner of TikTok made to avoid banning the video-sharing app in the United States.
The Trump administration was reviewing the proposals on Thursday, with the approaching deadline for the sale of app operations in the United States to a US company, in line with an executive order from President Donald Trump. Oracle would take a minority stake in TikTok under the proposals, with ByteDance retaining majority ownership.
The TikTok initial public offering was included in the original plan that the companies submitted to the US government at the weekend, according to people briefed on the proposal. One person said the listing could happen within a year.
ByteDance and Oracle have made a series of concessions to address national security concerns raised by the Trump administration, which says the Chinese government has access to data on TikTok users in the United States.
The perks include setting up TikTok as a US-based company and all of its board members will be US citizens, according to people familiar with the deal. These people added that TikTok’s board will also have a security committee led by someone with government security clearances.
The administration will have to approve the board members and the head of the security committee.
Instagram founder Kevin Systrom has emerged as a candidate to run restructured TikTok. The company is in preliminary talks with Mr. Systrom about the CEO role following the unexpected departure of Kevin Meyer Last month, according to a person familiar with the situation.
Systrom sold Instagram to Facebook in 2012 and quit after six years after a dispute with Mark Zuckerberg over diminishing independence of the app from the larger parent company. His discussions with TikTok were first reported by The New York Times.
In the proposed deal to the US government, ByteDance will retain control over the TikTok algorithm – the crucial part of the app that identifies the videos users see first, and has been the main driver of its massive success around the world – but Oracle will process data from US users and they will have to verify Of any changes to the algorithm prior to its development.
As part of the current ByteDance proposal, which has been swinging back and forth with the US Foreign Investment Commission – an interagency committee that could block deals for national security reasons, Oracle and Walmart would own 20 percent of TikTok’s global business.
ByteDance, which already includes many American investors, such as the General Atlantic private equity group and Sequoia venture capital fund, will retain an overwhelming majority of TikTok. It is unclear whether ByteDance will sell a portion of its IPO stake in the future.
Trump and key members of his administration remain concerned about the proposal’s viability, according to public statements over the past 24 hours.
Mark Meadows, the White House chief of staff, said Thursday that “if all we do is repack it and continue to keep it as a mostly Chinese government-run company, that will not align with the original goal set by the president.”
Mr. Trump was unclear on Wednesday whether he would allow ByteDance to keep a majority stake in the new company. When asked whether he would accept such an arrangement, Trump said: “If this is the case, I will not be happy.”
ByteDance’s decision to retain full control over its algorithm raised the alarm on Capitol Hill as Marco Rubio, head of the Senate Intelligence Committee, and other Republicans urged Trump not to agree to the current deal.
Mr. Rubio and several of his Republican counterparts in the Senate wrote Wednesday to Stephen Mnuchin, the Treasury Secretary who chairs Cfius.
#techFT brings you news, commentary and analysis about major companies, technologies and issues that are the fastest moving industry segment from professionals located around the world. click here To get #techFT in your inbox.