Oracle and Walmart, the new investors, will gain from TikTok deal because Oracle Cloud will be powering the infrastructure of the video-sharing app, while Walmart will be driving additional business from TikTok customers.
Oracle will pick up 12.5 percent stake and retail major Walmart will have 7.5 percent stake in TikTok Global, a new company being headquartered in the US.
The parent company ByteDance will own the remaining 80 percent of TikTok. China’s ByteDance is seeking $60 billion TikTok valuation in U.S. deal, Bloomberg reported.
Oracle announced it was selected as TikTok’s cloud provider and will become a minority investor with 12.5 percent stake. Oracle Cloud is far behind in the cloud business as compared with Amazon Web Services (AWS), Microsoft, and Google Cloud. Microsoft was aiming to buy TikTok.
Oracle Cloud ensures 80 percent savings as compared with Amazon Web Services (AWS) owned by retail major Amazon.com.
Walmart said it has tentatively agreed to a purchase 7.5 percent stake in TikTok and its CEO Doug McMillon would serve as one of the five board members of the newly-created company.
Walmart said it will bring its omni-channel retail capabilities including its Walmart.com assortment, eCommerce marketplace, fulfillment, payment and measurement-as-a-service advertising service.
US President Donald Trump on Saturday announced that China-based ByteDance, the parent company of TikTok, received tentative approval for an agreement with the US government to resolve the outstanding issues.
“TikTok Global will be majority owned by American investors, including Oracle and Walmart. TikTok Global will be an independent American company, headquartered in the US, with four Americans out of the five member Board of Directors,” Walmart and Oracle said in a joint statement.
All the TikTok technology will be in possession of TikTok Global, and comply with US laws and privacy regulations.
Data privacy for 100 million American TikTok users will be quickly established by moving all American data to Oracle’s Generation 2 Cloud data centres.
TikTok Global will create more than 25,000 new jobs in the US and will pay more than $5 billion in new tax dollars to the US Treasury.
“We are pleased that the proposal by TikTok, Oracle, and Walmart will resolve the security concerns of the US administration and settle questions around TikTok’s future in the US,” ByteDance said in a statement.
TikTok Global will have an Initial Public Offering (IPO) in less than 12 months and be listed on a US Exchange.