The TikTok Saga continues: Deal with Oracle and Walmart on hold

It would be hard to squeeze this ongoing story into a 60-second TikTok.

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TikTok has been a political football.

Angela Lang/CNET

A deal to sell the US operations of TikTok is on hold.

On Wednesday, The Wall Street Journal reported that a complex deal involving Oracle and Walmart had been shelved as the Biden administration reviews the security risks posed by TikTok and other Chinese-owned apps. The Journal cited people familiar with the situation.

TikTok has been a political football since last summer, when then-President Donald Trump issued a pair of executive orders that cited the app's data collection practices as national security concerns. One of the executive orders barred transactions with TikTok, while the other required the sale of the US business. The orders, which would've effectively banned TikTok, prompted a scramble to find a buyer for the popular app. Oracle and Walmart struck a complex deal that appeared to have Trump's blessing but wasn't completed before he left office. 

TikTok, Oracle and Walmart didn't immediately respond to requests for comment.

The new and indefinite pause on the sale comes after a series of court cases brought by TikTok and content creators to block Trump's proposed ban. In December, a federal judge said the government had "likely overstepped" its authority in pushing to ban the app. The judge's order prevented the government from blocking internet hosting companies, content delivery networks and other services from working with TikTok.

Here's what you need to know about the complex drama:

Alright, so if a deal happened, what would it look like?

That's a big "if" given all that's happened in this saga. If a deal were to happen, it would likely look different than the deal struck last year, the Journal reported, citing unnamed people. That said, some details were discussed last year when the proposed deal looked like it would happen. Oracle and Walmart would get a combined 20% stake in a new company called TikTok Global, which would later go public. Four of the five members on TikTok Global's board of directors would be American.

Oracle would host all US user data on its cloud platform and be tasked with "securing associated computer systems," TikTok said in a statement at the time.

"We are a hundred percent confident in our ability to deliver a highly secure environment to TikTok and ensure data privacy to TikTok's American users, and users throughout the world," Oracle CEO Safra Catz said in a statement.

Watch this: TikTok-Oracle deal approved, temporary block on WeChat ban

TikTok Global would likely create 25,000 US jobs as part of an expansion of its global headquarters, which would remain in the US. TikTok Global would pay more than $5 billion in new tax dollars to the US Treasury, according to Walmart. It would also create an educational program to "develop and deliver an AI-driven online video curriculum" that includes courses in math, reading, science, history and computer engineering for children.

Does that mean ByteDance owns 80% of TikTok Global?

There's confusion over how big a role ByteDance would play in TikTok Global. ByteDance says it would have an 80% stake in TikTok Global before the new company goes public. 

But Ken Glueck, Oracle executive vice president, said in a statement that "upon creation of TikTok Global, Oracle/Walmart will make their investment and the TikTok Global shares will be distributed to their owners, Americans will be the majority and ByteDance will have no ownership in TikTok Global."

A person familiar with the deal told The Wall Street Journal that ByteDance wouldn't technically be an owner of TikTok Global because shares in the entity would be given to ByteDance investors. About 40% of ByteDance is owned by US venture capital firms. 

Why would Walmart want a stake in TikTok?

TikTok has been experimenting with e-commerce features. Last year, the company started letting some users add links to e-commerce sites so people can buy products shown in videos. 

Walmart said it would "bring its omnichannel retail capabilities including its Walmart.com assortment, eCommerce marketplace, fulfillment, payment and measurement-as-a-service advertising service" to TikTok.

Would the Chinese government approve of the TikTok-Oracle deal?

China reportedly objected to a forced sale of TikTok's US operations, but the current deal structure isn't a full divestment. Still, there are signs Beijing isn't fully comfortable with the proposal. 

"Based on what I know, Beijing won't approve current agreement between ByteDance, TikTok's parent company, and Oracle, Walmart, because the agreement would endanger China's national security, interests and dignity," tweeted Hu Xijin, editor-in-chief of the Global Times. The tabloid is backed by China's Communist Party. 

In August, China issued new restrictions on exports of artificial intelligence technology, a move that delayed the TikTok deal. Under the current proposal, ByteDance won't be transferring its algorithm and technology to Oracle, which might satisfy Chinese regulators.

CNET's Steven Musil contributed to this report.