Brief:

• TikTok is facing more uncertainty amid conflicting claims about a new ownership structure that would avoid a permanent ban of the popular social video app in the United States. Business software giant Oracle and ByteDance, the Chinese owner of TikTok, have issued differing statements to describe a deal that had received tentative approval from President Trump last weekend, Reuters reported.
• ByteDance on Monday said it will own 80% of TikTok Global, a newly created U.S. company that will be a subsidiary to oversee most operations worldwide. The same day, Oracle issued a statement saying ByteDance’s ownership of TikTok Global would be distributed to investors, and that ByteDance wouldn't own the company, Reuters reported.
• An earlier joint announcement from Oracle and Walmart explaining the terms of the deal with ByteDance appeared to position the new U.S.-based TikTok Global as a potential competitor to major digital platforms, a development that is now being called into question as the deal falters again. The statement claimed Oracle would own 12.5% of TikTok Global and provide cloud computing services, while Walmart would own 7.5% and provide e-commerce support to TikTok.

Insight:

Oracle and ByteDance's conflicting claims about TikTok's future ownership structure add more uncertainty to a complicated deal intended to satisfy the Trump administration's concerns about the popular app. The added uncertainty could dissuade mobile marketers from running advertising campaigns on TikTok in the U.S. until it's clear that the app won't be banned. ByteDance now has until Sep. 27 to reach a deal that will satisfy U.S. regulators, after being granted a one-week reprieve from a ban that had been set to go into effect on Sunday. Oracle, ByteDance and Walmart must straighten out their differences in a way that satisfies the U.S. and Chinese governments, which ultimately must approve any deal.

The latest wrinkle in the agreement follows President Trump's order last month that ByteDance divest TikTok's U.S. operations after the Committee on Foreign Investment in the United States (CFIUS) determined the app posed a national-security risk. ByteDance three years ago had bought video app Musical.ly, an earlier version of TikTok that had gained a following among U.S. teens. CFIUS said it could review that deal because ByteDance hadn't receive its approval before the launch of TikTok two years ago. Since then, the social video app has collected a vast trove of data about U.S. users. Because Chinese companies like ByteDance can be forced to share data about people with China's government, its ownership of TikTok has been a concern of the Trump administration and other critics. TikTok has said that it doesn't share data about U.S. users with the Chinese government, and wouldn't do so if asked, though that assertion hasn't satisfied critics.

With Oracle and Walmart's financial, technological and logistics support, TikTok Global can develop into a formidable marketing and e-commerce platform to rival platforms like Google, Facebook and Amazon that currently dominate the U.S. digital ad market. If a deal is completed, TikTok can focus more on boosting its scale after developing a following of 100 million users in the U.S., including Generation Z consumers that are hard to reach in other media channels. With the rise in social media usage during the coronavirus pandemic and ongoing concerns with Facebook's content moderation policies, TikTok has been drawing interest from major brands. TikTok also is emerging as a significant app for influencer marketing campaigns that have become more popular during the pandemic as brands seek to cut through ad clutter.