ByteDance has agreed to list TikTok on a US stock market at some point after its proposed partnership deal with American software group Oracle, as part of its effort to satisfy the Trump administration’s national security concerns with the video-sharing app.
People with direct knowledge of the matter said that an initial public offering in the US — and not in China or Hong Kong — was one of several commitments made by TikTok’s Chinese owner to avert a ban on the video-sharing app in the US.
The Trump administration was on Thursday reviewing the proposals, with a deadline looming for the app’s US operations to be sold to an American company, in line with an executive order from President Donald Trump. Oracle would take a minority stake in TikTok under the proposals, with ByteDance retaining majority ownership.
A TikTok IPO had been included in the original plan that the companies provided to the US government at the weekend, according to people briefed on the proposal. One person said the listing could happen within a year.
ByteDance and Oracle have made a series of concessions to address national security fears raised by the Trump administration, which says the Chinese government has access to data on TikTok’s US users.
The concessions include setting TikTok up as a US-headquartered company whose board members would all be American citizens, according to people familiar with the deal. The TikTok board would also include a security committee led by a person with government security clearances, these people added.
The US administration would have to approve both the board members and the head of the security committee.
Kevin Systrom, the founder of Instagram, has emerged as a candidate to run the restructured TikTok. The company is in preliminary talks with Mr Systrom about the chief executive role following the unexpected departure of Kevin Mayer last month, according to a person familiar with the situation.
Mr Systrom sold Instagram to Facebook in 2012 and quit six years later after clashing with Mark Zuckerberg over the app’s shrinking autonomy from its larger parent. His discussions with TikTok were first reported by the New York Times.
In the deal proposed to the US government, ByteDance would retain control of the TikTok algorithm — the critical part of the app that determines which videos users see first, and has been the main driver of its huge success worldwide — but Oracle would process the data of US users and it would have to verify any changes to the algorithm before they are instituted.
As part of ByteDance’s current proposal, which has been going back and forth with the Committee on Foreign Investment in the US — an intra-agency panel that can block deals on national security grounds, Oracle and Walmart would own 20 per cent of TikTok’s global business.
ByteDance, which already includes several US investors, such as private equity group General Atlantic and venture capital fund Sequoia, would retain the overwhelming majority of TikTok. It is unclear whether ByteDance would sell part of its stake in a future IPO.
Mr Trump and key members of his administration remain concerned about the workability of the proposal, according to public remarks over the past 24 hours.
Mark Meadows, White House chief of staff, said on Thursday that “if all we’re doing is repackaging it and still keeping it as a predominantly Chinese-government run company, that would not sit well with the original goal the president outlined”.
Mr Trump on Wednesday was unclear if he would allow ByteDance to retain a majority stake in the new company. Asked if he would accept such an arrangement, Mr Trump said: “If that’s the case, I’m not going to be happy.”
ByteDance’s decision to retain full control of its algorithm has sounded alarms on Capitol Hill where Marco Rubio, who heads the Senate intelligence committee, and other Republicans have urged Mr Trump not to approve the existing deal.
“We remain opposed to any deal that would allow China-based or controlled entities to retain, control or modify the code or algorithms that operate any US-based version of TikTok,” Mr Rubio and several of his Republican Senate peers on Wednesday wrote to Steven Mnuchin, the Treasury secretary who chairs Cfius.
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