Earlier today, ByteDance released an explanation on some of the false rumors on the TikTok deal with Oracle and Walmart. ByteDance stated that in order to ensure that 100 million American users can continue to use TikTok, meet the regulatory requirements of the US government, and strengthen TikTok's US business, ByteDance, Oracle, and Walmart have formed a principled consensus on TikTok's cooperation.

The three parties will advance the negotiation in accordance with the relevant consensus and hope to reach a cooperation agreement that meets the legal requirements of the United States and China as soon as possible."

It should be noted that in order to ensure that "as soon as possible" means this week, President Trump delayed the banning of the app only until midnight September 27^th. It will not be allowed to drag this out until after the election.

Explanation on Some False Rumors on TikTok

In their explanation, ByteDance clarified some rumors about the existence of trilateral cooperation. The core points are as follows:

In order to ensure that 100 million American users can continue to use TikTok, meet the regulatory requirements of the US government, and strengthen TikTok's US business, ByteDance, Oracle, and Walmart have formed a principled consensus on TikTok's cooperation. The three parties will advance the negotiation in accordance with the relevant consensus and hope to reach a cooperation agreement that meets the legal requirements of the United States and China as soon as possible.

In response to some rumors about the existence of tripartite cooperation, the clarifications are as follows:

Rumor 1

The main shareholder of TikTok Global is an American investor, and ByteDance will lose control of TikTok.

The Actual Situation

TikTok Global is a 100% owned subsidiary of ByteDance, headquartered in the United States.

TikTok Global plans to start a small round of Pre-IPO financing. After the financing, TikTok Global will become an 80% holding subsidiary of ByteDance.

The board of directors of TikTok Global includes the founder of ByteDance and current directors of ByteDance, as well as the CEO of Wal-Mart.

TikTok Global will also launch a listing plan to further enhance the corporate governance structure and transparency.

Rumor 2

The second rumor is that Oracle may use and possess the source code of TikTok.

The Actual Situation

The current plan does not involve the transfer of any algorithms and technologies. Oracle has the authority to check the source code of TikTok USA.

Displaying the source code is a universal solution for multinational companies to face local data security concerns. In 2016, Microsoft established a Technology Transparency Center in Beijing, where Chinese technical experts can view the source code of Microsoft products and services to check their security. In 2019, Cisco opened a technical verification service center in Bonn, Germany, to publicly verify the compliance of its 5G source code to the German Federal Information Security Agency.

Rumor 3

TikTok Global will pay US$5 billion in taxes to the US Department of the Treasury for this plan.

The Actual Situation

The so-called tax payment of $5 billion to the US Treasury Department is a forecast of the corporate income tax and other operating taxes that TikTok will need to pay for its business development in the next few years. TikTok is full of confidence in the future development, but the actual tax amount still needs to be determined according to the actual development of the business and the tax structure of the United States. The tax forecast has nothing to do with this cooperation plan.

There is a fourth rumor about the $5 Billion educational fund to emerge from this deal. However, the Taiwanese report oddly decided to present ByteDance's response to that fourth issue in the form of a graphic with no chance for us being able to translate it for this report.

The response likely presents a different account of what the educational fund will entail than the one that President Trump characterized during a recent political rally.

Update 1: 10 a.m. 

A new Reuters report issued this morning states that "U.S. President Donald Trump on Monday said his administration would not approve the sale of TikTok to Oracle Corp and Walmart Inc if China's ByteDance maintains any control.

Trump further specified: "If we find that they don’t have total control, then we’re not going to approve the deal... We will be watching it very closely," Trump told Fox News in an interview. The saga continues. 

Update 2: 12. 45 p.m.

On Monday, Reuters posted a second report on this matter wherein Oracle also entered the debate by adding that "ByteDance’s ownership of TikTok would be distributed to ByteDance’s investors, and that the Beijing-based firm would have no stake in TikTok Global."

The report further noted that while Oracle’s account of the deal would mean that ByteDance would be complying with the President's order, ByteDance’s account of the deal would represent a policy reversal for Trump."  - And of course that isn't going to happen.

With ByteDance being miles apart on what the agreement was to mean, it's clear that the U.S. Administration has little choice but to allow next Sunday's deadline to expire and remove the TikTok app from Apple and Google App Stores without delay to make the message loud and clear: A deal with the U.S. is to mean ByteDance China is to own no part of the new U.S. Company TikTok Global, period. The subsidiary angle revealed today only goes to show us that ByteDance has no interest in the deal the U.S. Administration has actually laid out.