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September 22, 2020

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TikTok unveils public listing plan

TIKTOK Global plans to hold a public listing, its Chinese parent company ByteDance said yesterday, after announcing a deal over the weekend that would avert a shutdown of the popular app in the United States.

The agreement, which has been approved by US President Donald Trump, sees Silicon Valley giant Oracle become the data partner for the video-sharing platform while Walmart becomes a commercial partner, creating a new US company called TikTok Global that will own most of the app’s operations worldwide.

Yesterday, ByteDance said in a statement on social media that TikTok Global plans to launch a “small round of pre-IPO financing,” after which it would become an 80 percent-owned subsidiary of ByteDance.

Oracle and Walmart have agreed to take stakes in TikTok Global of 12.5 percent and 7.5 percent, respectively.

“TikTok Global will also launch a listing plan to further enhance its corporate governance structure and transparency,” the statement said. It did not say how much it intended to raise or where it plans to list.

Bloomberg News reported that Bytedance was seeking a valuation of US$60 billion for TikTok, citing a source.

ByteDance in its statement also said it was a “rumor” that US investors would be TikTok Global’s majority owners and that ByteDance would lose control over TikTok.

The Beijing-based firm said TikTok Global’s board of directors will include ByteDance founder Zhang Yiming as well as Walmart’s chief executive Doug McMillon and current directors of ByteDance. Oracle and Walmart said earlier that four out of the five board of directors will be Americans.

Global phenomenon

TikTok — which became a global phenomenon with its brand of short, addictive videos — has come under fire in recent months as tensions escalate between China and the US.

Trump has claimed TikTok is collecting user data for Beijing, without providing evidence, and signed an executive order on August 14 giving ByteDance 90 days to sell TikTok. On Saturday, he said he supported a deal in principle that would allow TikTok to continue to operate in the US.

The current plan for TikTok Global does not involve any transfer of algorithms or technologies, and Oracle will be able to inspect TikTok US’s source code, ByteDance said. This is akin to US companies such as Microsoft Corp sharing their source code with Chinese technology experts, ByteDance added.

While Oracle has the authority to check the source code of TikTok in the US, ByteDance said displaying the source code is a way for multinationals to allay local data security concerns.

ByteDance also said a US$5 billion payment of taxes TikTok Global is reportedly supposed to make to the US Treasury is based on estimated income and other taxes the company will need to pay over the next few years and has nothing to do with the weekend deal.

Trump last week had said there would be a US$5 billion US education fund as part of the deal but ByteDance has said it was not aware of this.

ByteDance owning the majority of TikTok Global and the algorithms means that ByteDance is “not out of the game” and has avoided the worst-case scenario, China’s Global Times said in an editorial published on Sunday.

Shen Yi, a Fudan University professor, said in a separate article in the Global Times yesterday that Trump’s nod to the deal “could even been seen as a reversal of US President Donald Trump’s executive order issued in August” and that it was helped by a “concerted effort” by the Chinese government, ByteDance and US domestic forces.

“If the Trump administration makes more moves to block the deal, it may encounter direct checks and balances from interest groups on Wall Street.”




 

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