Thread by @b_fung

I’ve spent my morning trying to understand better who will own what under the TikTok deal, and it is just an utter mess trying to get to any clarity. If you know more, please get in touch.

We start with two seemingly conflicting statements from ByteDance and Oracle…

ByteDance claimed that the new TikTok ("TikTok Global”) will be a “100% owned subsidiary of ByteDance.”

Oracle said after it and Walmart make their investment, "Americans will be the majority and ByteDance will have no ownership in TikTok Global."

Here’s what I’ve been able to gather so far, from a person familiar with the deal.

TikTok Global has to be created. Once it’s established, its ownership structure will simply reflect ByteDance’s ownership structure, but this is not the same as saying ByteDance is the owner.

So just as ByteDance is currently broken down by 41% US investors, 14% international investors and 45% Chinese investors, TikTok Global will also have this same breakdown in investor stakes.

But ByteDance, the actual corporate entity, will not be an investor, the person said.

Then, once TikTok Global is set up, Walmart and Oracle come in with their investments, diluting the shares and ending up at a cumulative 20% stake in TikTok.

That’s how you get this number where 53% of TikTok ends up being held by US shareholders, according to the person.

At this stage, 11% of TikTok’s investors are international and 36% Chinese.

Bear in mind that these investors, along with some fraction of the US investors in TikTok, are still separately investors in ByteDance, but are not ByteDance. Follow me?

At some point in the next year, TikTok Global plans to file for an IPO on a US stock exchange.

Based on that listing, the parties anticipate the stake in TikTok that’s held by US investors to grow even further, from 53% to closer to 59%, the person said.

Where the parties seem aligned is that ByteDance’s founder Zhang Yiming is likely to serve as a member of the board of TikTok Global.

But this ownership thing is still messy and seems unsettled based on the various companies’ public statements.

I spoke to @kierstentodt and @james_a_lewis on the TikTok deal.

Todt described the confusing structure as “rearranging deck chairs on the Titanic” as Lewis told me it looked like a “sleight of hand.”

Todt argues it doesn’t resolve the natsec concerns; Lewis says it “should.”