The Turbulent Deal Surrounding TikTok's U.S. Operations: A New Phase Born Between Politics and Business

The Background of TikTok's US Business in Crisis and Political Pressure

In 2020, TikTok, the short-video platform sweeping the globe, faced an existential crisis in the US market. The trigger was a "ban" issued by the Trump administration at the time.Underlying this was serious national security concerns: the possibility that ByteDance, the Chinese company operating TikTok, could provide U.S. user personal data to the Chinese government, or that the Chinese government could use the platform to spread propaganda.

This political pressure came as a bolt from the blue for TikTok, which was rapidly expanding its user base in the U.S. The prospect of TikTok—enormously popular, especially among young people, and indispensable as a platform for entertainment, information sharing, and even business—being shut out of the U.S. overnight sent shockwaves through users, content creators, advertisers, and most significantly, ByteDance itself.

The U.S. government demanded the sale of TikTok's U.S. operations to an American company. Several major tech and retail companies stepped forward in response.

• Microsoft: Leveraging its strengths in cloud and enterprise solutions, the company explored integrating TikTok's technical infrastructure and user data.
• Oracle: With its strengths in data management and cloud infrastructure, the company proposed solutions to TikTok's data security concerns.
• Walmart: The retail giant focused on TikTok's potential in e-commerce, considering integration as a new sales channel.

These companies were highly attracted to TikTok's massive user base, data, and innovative algorithms. However, this deal transcended a simple corporate acquisition, becoming a symbol of the U.S.-China high-tech supremacy battle and drawing global attention. Amidst the complex intertwining of political motives and business interests, the fate of TikTok's U.S. operations was shrouded in uncertainty.It was truly a nail-biting deal that demanded the attention of an international financial journalist.

The Joint Venture: Oracle and Walmart's "Unconventional Strategy"

Amid the tense situation, negotiations over TikTok's U.S. operations took an unexpected turn.Initially, the Trump administration strongly demanded a "full sale" to U.S. companies, but ByteDance firmly refused to sell TikTok's core algorithm technology. This was the source of TikTok's competitiveness, and the Chinese government also feared its leakage. This led to the emergence of a third path: the "joint venture" proposed by Oracle and Walmart.

This deal, far from a pure M&A (merger and acquisition), involved establishing a new company called "TikTok Global," with a majority stake held by American investors—a truly unconventional strategy.

The specific scheme is as follows:

• Oracle's Role: As TikTok Global's "trusted technology partner," Oracle would host U.S. user data on its cloud infrastructure within the United States and ensure its security. This aimed to dispel national security concerns. Oracle's advanced data security technology was key to this deal.
• Walmart's Role: As TikTok Global's "commercial partner," Walmart would strengthen collaboration in e-commerce. Walmart focused on TikTok's potential for live commerce and social commerce, aiming to reach new customer segments and expand online sales. Significant synergies were anticipated, such as Walmart products being sold directly on TikTok's platform.
• TikTok Global Governance: The new company's board of directors was agreed to have a majority of U.S. members. Additionally, U.S. user data would be stored in U.S. data centers, with Oracle monitoring its security. This aimed to meet U.S. national security requirements.

This joint venture was built on a delicate balance: ByteDance retained control of TikTok's algorithm while meeting U.S. government demands.For Oracle and Walmart, it held strategic significance beyond access to TikTok's massive user base and data—it also contributed to resolving geopolitical issues surrounding Chinese companies. It was truly an innovative deal, one that international financial journalists should watch, seizing business opportunities amid political pressure.

The Deal's Complexity and the Interests of the Parties Involved

This TikTok deal stands as a unique case in international business history due to its complexity and multi-layered motivations.Initially, President Trump insisted that "the deal must be 100% controlled by U.S. companies." However, he ultimately signaled his "blessing" for a joint venture structure where ByteDance retains control of the algorithm. This can be interpreted as accepting the joint venture as a realistic solution rather than insisting on a complete sale. Yet, this "blessing" was temporary, as the deal still faced complex reviews by both the U.S. and Chinese governments before final approval.

The respective intentions of the parties involved were as follows:

• ByteDance (TikTok): Maintaining operations in the U.S. market was the top priority. The U.S. market is indispensable to TikTok's global strategy and the source of its technological advantage. It needed to deflect political pressure without relinquishing its algorithm. The joint venture can be seen as a stopgap measure to resolve this dilemma.
• Oracle: Facing intensifying competition in its cloud business, acquiring TikTok as a major client and handling its data security presented a prime opportunity to showcase its technological capabilities and reliability globally. Furthermore, involvement in this politically sensitive deal likely offered prospects for strengthening ties with the government.
• Walmart: Amid intensifying competition with Amazon in e-commerce, Walmart was highly attracted to TikTok's potential in social commerce. By capturing TikTok's young user base, Walmart aimed to accelerate its online strategy and gain a new growth engine.
• U.S. Government: The goal was to dispel national security concerns and minimize the risk of U.S. data leaking to the Chinese government. With a full sale proving difficult, the joint venture involving Oracle's data management and U.S.-led governance offered an aspect that could be presented as a political victory.
• Chinese Government: Vigilant against technology leakage from its own high-tech companies, it strictly restricted the overseas sale of core technologies, particularly algorithms. ByteDance retaining its algorithms aligned with the Chinese government's intentions and can be seen as an expression of technological nationalism.

Thus, this deal was not merely a business transaction but presented an extremely multifaceted landscape where international politics, national security, and the struggle for technological hegemony were intricately intertwined. Ultimately, while the establishment of TikTok Global was realized, the subsequent change in the U.S. administration further heightened the legal and political uncertainty surrounding the deal. It was truly a microcosm of modern business that international financial journalists should decipher.

The Future of Joint Ventures and Implications for International Business

The joint venture involving Oracle and Walmart for TikTok's U.S. operations highlighted new challenges and possibilities in international business. This deal became a symbolic case study demonstrating how national security and corporate commercial interests become intricately intertwined amid escalating geopolitical tensions between the U.S. and China.Ultimately, the joint venture failed to secure final U.S. government approval before the end of the Trump administration, and under the Biden administration, the TikTok ban itself was withdrawn. However, the aspect of this deal—the "partnership strategy to overcome political risks"—offers highly significant implications for today's international business.

Key lessons from this deal include:

• Increasing Geopolitical Risks: Technology companies face heightened risks of exposure to international political pressure not only due to their products or services, but also because of their country of origin and data management practices. Government intervention is particularly unavoidable in areas involving data privacy and national security.
• Evolution of M&A and Partnerships: Beyond traditional pure acquisitions and mergers, "joint ventures" and "strategic partnerships" designed to navigate political and regulatory constraints will become increasingly important options. Complex schemes aimed at retaining core technologies and ensuring data governance are likely to proliferate.
• The Importance of Data Governance: For companies handling data across borders, where data is stored, access permissions, and security measures are no longer merely technical issues but political and legal challenges that impact business continuity. The role of a "trusted technology partner," as exemplified by Oracle, will become increasingly vital.
• Dialogue and Lobbying with Governments: Companies operating internationally must actively engage in dialogue and relationship-building with governments and regulatory bodies worldwide. Lobbying efforts to influence policy-making processes should also be considered part of business strategy.

The TikTok case demonstrates that while technological evolution blurs national borders, we have entered an era where concepts of national sovereignty and security strongly influence business decision-making. Similar political intervention and regulatory tightening are expected in strategic technology sectors like AI, data, and 5G. As international financial journalists, we must continue to closely monitor the emerging trends of new deals arising at this intersection of geopolitics and business.