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An Unusual Deal Keeps TikTok On US Phones

a TikTok logo
Solen Feyissa /Flickr (CC BY-SA 2.0)

From Texas Standard:

The Trump administration approved a deal Saturday that will keep TikTok available in the United States. Late last week, the Commerce Department had announced the app, along with another Chinese-based social app WeChat, would have to be removed from mobile app stores Sunday. 

The new deal gives Walmart and database giant Oracle a 20% share in a new firm, TikTok Global. And there's a potential Texas connection – one the Trump administration insisted on that's intended to support an education initiative it favors. TikTok has a number of employees in Austin and plans to expand in the coming year. 

Kate Cox is a tech policy reporter for Ars Technica. She told Texas Standard the administration argues TikTok has access to large amounts of data stored on the mobile phones of U.S. users, and that that presents a national security risk because TikTok is run from China. It argues giving U.S. companies some control over the service reduces that risk. 

"This is a kind of bonkers deal, to be honest," Cox said. "Oracle and Walmart are acquiring 20% of a new company [that] ByteDance, TikTok's parent company, is spinning off."

ByteDance retains the rest of the company, which is already partially owned by U.S. investors. 

"The reasoning goes that TikTok Global will be 53% U.S.-owned, and four out of five seats on its board will be reserved for people in the U.S., so that meets the terms of the executive order the president issued in August that would ban TikTok if it did not divest to a U.S. seller."

President Donald Trump previously has said a TikTok deal should include a $5 billion payment to the U.S. Treasury. On Saturday, he said the deal included $5 billion for an educational fund that could be based in Texas.

In a statement, Walmart and Oracle said the fund "would develop and deliver an AI-driven online video curriculum to teach children all over the country." The statement did not mention the amount of the fund or where its work would be based.

Texas Gov. Greg Abbott tweeted about the Texas connection Saturday, suggesting the state would make a good headquarters for the venture.

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