Business

Beijing unlikely to approve Oracle, Walmart's TikTok deal, says Global Times newspaper

The deal requires approval from regulators in both Beijing and Washington

Image: Reuters/Florence Lo/Illustration
  • The Global Times is a tabloid published by the People’s Daily, the official newspaper of China’s ruling Communist Party, but does not speak on behalf of the party and government, unlike its parent publication;
  • Reuters reported this month, citing sources, that Beijing opposed a forced sale of TikTok’s U.S. operations by ByteDance, and would prefer to see the short video app shut down in the United States.

China is unlikely to approve an “unfair” deal Oracle and Walmart said they have struck with ByteDance over the future of video-streaming app TikTok, the state-backed Global Times newspaper said in an editorial.

The U.S. majors have said they would buy into a new mainly U.S.-owned company, TikTok Global, with a board of directors comprised mainly of Americans, as the parties work to pacify the administration of U.S. President Donald Trump, which had planned to ban TikTok in the United States on security grounds.

In contrast, ByteDance has said TikTok Global would be its U.S. subsidiary with 80% ownership.

READ ALSO: ByteDance plans TikTok IPO as U.S. deal talks advance

“It is clear that these articles (terms) extensively show Washington’s bullying style and hooligan logic. They hurt China’s national security, interests and dignity,” the newspaper said in an editorial in its English edition published late on Monday. It was also carried in its Chinese edition.

“From the information provided by the U.S., the deal was unfair. It caters to the unreasonable demands of Washington. It’s hard for us to believe that Beijing will approve such an agreement,” it said, echoing comments on Twitter the same evening from its editor-in-chief, Hu Xijin.

Hu on Tuesday, responding to comments Trump made to Fox News about how TikTok Global was going to be “totally controlled” by Oracle, said on Twitter: “Stop extorting. You think TikTok is a company from a small country?”

“There’s no way the Chinese government will accept your demand. You can ruin TikTok’s U.S. business, if U.S. users do not object, but you can’t rob it and turn it into a U.S. baby.”

The Global Times is a tabloid published by the People’s Daily, the official newspaper of China’s ruling Communist Party, but does not speak on behalf of the party and government, unlike its parent publication.

China’s government has largely refrained from directly commenting on the deal’s details, though the foreign ministry has said the United States should offer a fair and non-discriminatory environment for foreign companies.

Reuters reported this month, citing sources, that Beijing opposed a forced sale of TikTok’s U.S. operations by ByteDance, and would prefer to see the short video app shut down in the United States.

The deal requires approval from regulators in both Beijing and Washington, ByteDance has said. China’s Ministry of Commerce in late August revised a tech export control list that experts said would give it regulatory oversight over any TikTok deal.

ByteDance and the commerce ministry did not immediately respond to requests for comment.

READ ALSO: Alphabet’s YouTube is launching a service to rival TikTok

The 25,000 new jobs promise

Another question emerged after Trump agreed over the weekend to keep the wildly popular video-sharing app running in the United States for another week: how can they possibly create 25,000 new jobs in the United States?

That vow, repeated by the president on Saturday at a campaign rally in North Carolina, was part of a concession that dealmakers offered to convince Trump to green-light a transaction in which a new board comprised of U.S. citizens would oversee a new U.S.-based company and co-owned by Oracle and Walmart.

But the lofty hiring target will be tough to justify, experts said. Such a high number suggests an expectation for massive revenue growth at a time when TikTok faces unprecedented global challenges.

If TikTok operated at anywhere near the efficiency of other internet companies such as Twitter, TikTok would need to generate up to 19 times more revenue over the next few years.

TikTok is expected to generate about a billion dollars in revenue by the end of 2020, Reuters previously reported.

READ ALSO: How TikTok went from a global sensation to Trump’s target

Many of the new American jobs will likely be in engineering, content moderation and security roles, given the U.S. government’s intense focus on the app’s data privacy policies, said Dan Ives, a technology analyst at Wedbush Securities.

“From a security and infrastructure perspective, they’re going to have to hire a few thousand alone to focus on that issue…given the sensitivity,” he said.

TikTok recently announced a $1 billion creator fund that will pay popular TikTok influencers for making videos. Counting those content creators would help TikTok reach 25,000 jobs, said Brian Wieser, global president of business intelligence at ad agency GroupM.

Beyond that, it gets harder to justify a bigger staff. Because ByteDance will still own the algorithm that runs TikTok and license it to the new U.S.-based company, the new company will not need to hire large teams that work on artificial intelligence.

Those types of jobs account for a large chunk of Facebook Inc <FB.O> and Twitter’s headcount, said Abishur Prakash, a geopolitical futurist at the Center for Innovating the Future, a technology and geopolitics consulting firm, raising questions about what job roles TikTok could hire for.

Oracle and Walmart could also create divisions within their companies to serve TikTok that could contribute to the job count, he added.

A source familiar with the deal discussions said the 25,000-job figure was based on similarly sized organizations that serve as many users as TikTok, without offering details. The source added that the job figure was actually conservative in an effort to under-promise and over-deliver.