![TikTok](https://digiday.com/wp-content/uploads/sites/3/2019/01/tiktok.jpg?w=1030&h=579&crop=1)
The TikTok U.S. spinoff saga continues to rambunctiously roll on. At the time of writing, U.S. President Donald Trump gave his “blessing” to a proposal that — on the face of it at least— doesn’t appear to satisfy the requirements in his August executive order.
TikTok’s Chinese parent company Bytedance said on Monday that the new “TikTok Global” company would be a “100% owned subsidiary of Bytedance.” The company is planning to raise a round of pre-IPO financing, after which TikTok Global would become a “80% holding subsidiary” of Bytedance. New investors Oracle and Walmart will take a 20% — 12.5% and 7.5% respectively — stake. According to multiple reports, this is being positioned as satisfying the U.S. requirements for majority ownership because ByteDance already has U.S. investors, reportedly bringing the total “American” ownership to around 53%. (Though Trump told Fox News Monday that his administration wouldn’t approve the deal unless it was under total U.S. control.)
As TikTok’s “trusted cloud and technology provider” Oracle will be allowed to inspect TikTok’s U.S. source code — but the current plan doesn’t include a China-U.S. transfer of TikTok’s valuable content recommendation algorithm and other technologies, according to ByteDance, which issued a statement to clarify ‘rumors’ Monday. Given that TikTok isn’t being entirely cut loose of Chinese ownership, it’s unclear how the term sheet switcheroo satisfies any potential U.S. national security concerns. Chinese authorities still need to approve the deal.
Clear as mud? As the formation of TikTok Global inches closer, here are some of the key outstanding advertiser concerns.
A noisy IPO
The ride isn’t over yet — expect more term sheet tussles and pushbacks from China over the finer details of the deal. If TikTok has been used as a political pawn once, there’s a good chance it will continue to be tangled in the U.S. vs China chess match once again as it nears an IPO, which is set for “less than 12 months time.”
There’s a good chance that IPO might be overvalued. The Information reported this weekend that Oracle and Walmart were already valuing TikTok Global between $50 billion and $60 billion. The upper end of that valuation, GroupM global president of business intelligence Brian Wieser points out, is nearly two times the value of Snap ($35 billion) but with considerably less revenue.
An overvalued IPO can attract employees with the promise of wealth, dependent on a mega valuation. But the share price can soon go south, even (and perhaps especially) after an initial “pop” — just ask Snap’s early employees. For advertisers, a TikTok IPO — particularly an overvalued one” — is “a distraction at a minimum,” said Brian Wieser, GroupM global president of business intelligence.
“It creates the risk that employees you develop relationships with become disgruntled,” said Wieser.
What exactly is Walmart up to? And will Walmart’s rivals approve?
Walmart said in a statement on Saturday that it expects the deal will provide it with “an important way for us to expand our reach and serve omnichannel customers as well as grow our third-party marketplace, fulfillment and advertising businesses.”
Walmart already has its own advertising arm, Walmart Media Group, which goes head to head for ad dollars with Amazon, but differentiates itself by using sales data from its physical stores. TikTok could help Walmart gain a foothold in social commerce, particularly among users that skew younger than the average Walmart shopper
“Walmart’s ability to bring ecommerce capability, retail data and closed loop measurement to the table will be welcomed by CPG brands,” said Joshua Lowcock, chief digital and global brand safety officer at ad agency UM.
But how will Walmart’s retailer rivals feel about the company getting a closer look under TikTok’s hood? Walmart chief executive Douglas McMillon will also become one of the five members of TikTok Global’s board — and you can bet your bottom dollar that sources of revenue will come up as a topic in those board meetings. What could unfold is the same kind of leeriness other top retailers feel about advertising on Amazon.
“TikTok will need to reassure Walmart’s retail competitors that their spend and campaign data will not be available to Walmart,” said Lowcock.
What will Oracle’s “trusted cloud and technology provider” status look like over time?
On the face of it, Oracle has landed itself a lucrative cloud customer, without having to jostle for favor with its bigger cloud hosting rivals Google and Amazon.
“Oracle will combine its secure cloud technology with continuous code reviews, monitoring and auditing to provide unprecedented assurance that U.S. TikTok user data is private and secure,” said Oracle in a statement this weekend.
I can’t recall a time that an advertiser chose a preferred media partner based on their cloud hosting provider. But advertisers might take more of an interest if Oracle found more of a way in which TikTok and its Data Cloud business could be better linked.
Don’t expect any announcements from Oracle to that end any time soon, however — not least as this proposal is centered around Oracle safely securing user data. It’s probably not worth Oracle muddling the conversation so early on as it positions itself as a U.S. data security savior.
But it could be on the roadmap further down the line.
“Oracle has not been able to capture the value of their investments into the ad tech world, having bought really strong businesses in BlueKai and DataLogix but never really finding out how to build real scale in their Marketing and Data Cloud Businesses,” said Dave Morgan, CEO of advanced TV company Simulmedia. (Indeed, in Europe, the company has retrenched its third-party data targeting product offering. Adweek reported on the latest earlier this month.)
Still, platform and cloud providers are always looking for opportunities to upsell.
“Having a tight partnership with TikTok might be able to help [Oracle] monetize those assets and convert them into a more proprietary data and ad targeting/measurement/attribution stack for TikTok advertisers,” said Morgan.
Are we hurtling towards a ‘Splinternet’?
There sure seem to be a lot of borders on the “open internet,” where your online experience increasingly differs depending on where you’re located. Many popular U.S. websites and apps — from Google to Facebook — are banned in China; meanwhile the Trump administration is also seeking to ban Tencent’s wildly popular WeChat from the U.S.
Hooman Radfar, venture partner at startup studio Expa and co-founder of web tracking company AddThis, which sold to Oracle in 2016, said the spirit of the U.S. reciprocity around its handling of Chinese tech businesses is largely warranted.
“What we need to have in the world is that people can communicate freely and privately without threat of duress from a government,” said Radfar. “That’s the end goal when designing these products — how you get there is nuanced and challenging.”
But some experts have warned against the Balkanization of the internet, or the so-called “Splinternet.” A fragmented global patchwork of different laws and bans only stands to make online ad buying even more complicated for multinational advertisers.
“If the internet does indeed splinter, advertisers will need to consider working with an agency that can plan and buy media from a neutral country to minimize exposure to regulatory and transactional risks,” said Lowcock. “It will require advertisers and agencies to better support and develop the technical capabilities of local market digital publishers.”
More in Media
![](https://digiday.com/wp-content/uploads/sites/3/2024/06/ai-human-agreement.jpg?w=439&h=277&crop=1)
Media Briefing: The 2024 media glossary, pt. 2
In part two of the 2024 Media Glossary, we tackle many of the terms you may have heard in conversations about generative AI as well as increasing the value of publishers’ on-site content.
![](https://digiday.com/wp-content/uploads/sites/3/2024/08/Digiday_1030x600-copy-1.jpg?w=439&h=277&crop=1)
Amid layoffs and cost cutting, Time CEO Jessica Sibley is expecting a ‘very strong second half’
Time CEO Jessica Sibley joins the latest episode of the Digiday Podcast.
![](https://digiday.com/wp-content/uploads/sites/3/2024/07/tennis-money-digiday.jpg?w=439&h=277&crop=1)
How IBM and the US Open are using Watsonx to create more AI-generated tennis content
Additions include match reports delivered within minutes and AI-generated long-form articles edited by a human editorial team.