Oracle and Walmart will acquire a 20% stake in TikTok’s global business as part of a pre-IPO financing round, ByteDance announced on Saturday. Oracle will acquire 12.5% of the short video app, whereas Walmart will pick up a 7.5% stake. As a part of the deal, TikTok will create a new company called TikTok Global which will provide TikTok services to users in the US and “most of the users in the rest of the world”, Oracle and Walmart said in a joint statement. The new entity will be an “independent” American company, headquartered in the US, and will have four Americans in a five member board of directors; Walmart CEO Doug McMillon will be on the board of TikTok Global.

TikTok Global will have an IPO in less than 12 months and be listed on a US stock exchange. After the IPO, American ownership of TikTok Global will “increase and continue to grow over time”, Oracle and Walmart said. While the deal has only received “tentative approval” from US President Donald Trump, he has given his “blessing” to the deal and had “approved the deal in concept.” Oracle and Walmart said that TikTok Global will be majority owned by American investors. Around 40% of ByteDance is reportedly already owned by US-based investment companies, and it appears that is how the deal is being pegged to be “majority owned” by American investors.

The US’ Commerce Department had said on Friday that WeChat and TikTok downloads in the US will be prohibited from app stores. Even American users who already have WeChat installed can no longer use the app to make or receive payments as of September 20. However for TikTok, this condition has been delayed until November 12, presumably to accommodate the stake purchased by Oracle and Walmart. This suggests that the app will continue working for users who already have it installed before September 20.

Oracle and Walmart’s role in the new structure

As part of the deal, Oracle will become TikTok’s “secure cloud provider”. In a separate statement, Oracle said that TikTok was “heavily influenced” by video conference platform Zoom’s recent move to the Oracle Public Cloud. Data of American users of TikTok will be moved to Oracle’s Generation 2 Cloud. Oracle said that its Generation 2 Cloud isolates running applications and responds to security threats autonomously, and eliminates the risk of foreign governments spying on American users or trying to influence them with disinformation.

Oracle also said it will combine its secure cloud technology with “continuous code reviews, monitoring, and auditing” to keep US users’ data safe. According to a Bloomberg report, Oracle could also get access to TikTok’s source code.

Walmart on the other hand will bring its omnichannel retail capabilities including its Walmart.com assortment, eCommerce marketplace, fulfilment, payment and measurement-as-a-service advertising service. It said the investment will allow it to grow its third-party marketplace, fulfilment and advertising businesses. It is worth noting that before this, Walmart had partnered with Microsoft to acquire TikTok, but Microsoft’s bid was rejected by ByteDance. Even before that, the company had had teamed up with Softbank and Alphabet to acquire TikTok.

Trump also said that TikTok will make a $5 billion contribution towards education. TikTok Global will create an educational initiative to develop and deliver an AI-driven online video curriculum to teach children in the US a variety of courses from basic reading and math to science, history and computer engineering.