NEW YORK/PALO ALTO, U.S.-- President Donald Trump has given the go-ahead to a deal for Oracle and Walmart to maintain TikTok's operations in the U.S., with the two American companies set to own 20% of a new entity created in agreement with TikTok's Chinese owner ByteDance.
"I have given the deal my blessing, if they get it done that's great, if they don't that's fine too," Trump told reporters on Saturday, hours before a ban on U.S. downloads of the popular video-sharing app was due to take effect.
Oracle, the Silicon Valley enterprise software giant, will become TikTok's technology partner and responsible for "hosting all U.S. user data and securing associated computer systems to ensure U.S. national security requirements are fully satisfied", TikTok said in a statement on Saturday shortly after President Trump spoke.
The widely popular short video app said it is also working on a commercial partnership with Walmart. Under the three-way partnership, an entity called TikTok Global will be created and will "maintain and expand" TikTok's current headquarters in the U.S., the company said in a statement.
In a joint statement by Oracle and Walmart, the companies said TikTok Global will have an initial public offering within 12 months and be listed on a U.S. exchange. Four Americans will be on a five-member TikTok Global board, they said.
Oracle and Walmart will take part in a TikTok Global financing round ahead of an IPO in which they can take up to a 20% cumulative stake in the company, both companies confirmed.
Oracle said it will take a 12.5% stake in TikTok Global.
"As a part of this agreement, TikTok will run on the Oracle Cloud and Oracle will become a minority investor in TikTok Global," said Oracle CEO Safra Catz in a statement.
Walmart said in its own statement that it had "tentatively agreed to purchase 7.5% of TikTok Global" and provide ecommerce and other services. CEO Doug McMillon would be a board member of the newly created company, Walmart said.
President Trump and his administration had targeted TikTok, along with the Chinese-owned WeChat app, over national security concerns.
On Saturday Trump said the new entity will "be a brand new company... It will have nothing to do with China. It will be totally secure."
Trump said that as part of the deal TikTok Global would contribute $5 billion to U.S. education. "We're going to be setting up a very large fund toward the education of American youth. And that'll be great. That's their contribution that I've been asking for," the President told reporters on Saturday.
Oracle and Walmart confirmed in the joint statement that "TikTok Global, together with Oracle, SIG, General Atlantic, Sequoia, Walmart and Coatue will create a multi-billion dollar education foundation to develop and deliver an AI-driven online video curriculum to teach children from inner cities to the suburbs a variety of courses from basic reading and math to science, history and computer engineering."
However, TikTok's Chinese parent ByteDance said in a statement that they had only heard about the education fund today.
"We will reach an agreement that satisfies both the U.S. and China's regulatory requirements soon," ByteDance said.
While other financial details of the deal remain unclear, the social media app said TikTok Global would create at least 25,000 jobs in the U.S. The joint statement by Walmart and Oracle said TikTok Global would pay more than $5 billion in new taxes to the U.S. Treasury.
The Chinese government has not signed off on the deal. Beijing previously announced the addition of several artificial intelligence technologies, including "personalized content recommendations based on data analysis," to its list of restricted exports, which created a major roadblock for ByteDance to sell TikTok's U.S. operations.
TikTok is facing a U.S. ban if a deal is not reached. The widely popular short video app was due to be removed from U.S. app stores from Sunday. That has now been postponed for a week until Sep. 27 as a deal draws closer.
The China-owned app will face a "real shutdown" after Nov. 12 in the absence of a deal, according to the U.S. Secretary of Commerce Wilbur Ross.
In a statement released on Saturday, China's Ministry of Commerce said it "firmly opposes" the U.S. decision to ban WeChat and TikTok. It added that it will "take necessary measures" to safeguard the interests of Chinese companies if the U.S. does not stop its "wrongdoing."