US regulators have tentatively agreed to a deal with the app's Chinese parent company, ByteDance, and its American partner, Oracle, a person familiar with the matter told CNN Business.
If the arrangement gets a formal green light, ByteDance would continue to be the majority shareholder in the short-form video app, the person said. TikTok would also become a global company with headquarters in the United States, while Oracle will host TikTok's user data and review TikTok's code for security. The deal is meant to satisfy the US government's national security concerns about the app.
Under the proposal, the US government would approve members of TikTok's board; one board member is to be an expert in data security and would hold a top-secret security clearance, according to the person. That appointee would also be responsible for chairing a security committee whose members would be US citizens individually approved by the US government, the person said.
The new global company is expected to file for an initial public offering in about 12 months, the person said, with plans to be listed on a US stock exchange.
Walmart may also still have a role to play in the deal as a possible minority investor and e-commerce partner, the person said, but no final decision has been made. If it were to become a minority investor, Walmart would likely get a seat on the board, according to the person.
The companies have been hashing out the complex business arrangement in the days leading up to September 20, when a potential ban on TikTok in the United States is scheduled to go into effect. That ban, though, would not restrict the social media app's employees from receiving wages or benefits, and it would not make it a crime for those employees to perform their day jobs, the US government said in a court filing Monday. (That clarification was issued in response to a lawsuit a TikTok employee filed against the government because of the looming ban.)
"Conceptually, I can tell you I don't like that," he said. "If that's the case, I'm not going to be happy with that."
Trump's cabinet officials were briefed on the deal Wednesday, the person said. Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and Attorney General William Barr appeared to be supportive of the proposal, according to the person, while Secretary of State Mike Pompeo was described as "neutral" and requested more details on how TikTok data would be protected. Pompeo later expressed his support for the deal to Trump in a meeting on Thursday, the person said.
Meanwhile a raft of lawmakers have weighed in on the proposal, with Sen. Josh Hawley — a vocal critic of TikTok remaining under ByteDance's control — urging that it be rejected.
Sen. Marco Rubio said Thursday he had received a briefing on the deal from Oracle and the Treasury Department, calling it "informative."
ByteDance has said that any deal needs to follow applicable laws in China as well. Last month, China revised rules that govern the sale of certain kinds of technology to foreign buyers. The updated list includes data processing, speech and text recognition — the kind of tech that experts say is used by TikTok.
The current proposal, though, does not involve a sale of Bytedance's technology, according to the person who spoke to CNN Business.