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Doubts surround ‘education fund’ connected to TikTok deal

An icon for the TikTok app on a phone.
President Trump says he had given “preliminary” approval for Oracle’s partnership with ByteDance and Walmart to operate TikTok, adding that he was in talks with the partners to fund a $5-billion “patriotic” education venture.
(Getty Images)

President Trump has given his “blessing” to Oracle’s partnership with ByteDance to operate TikTok, but his claim that the companies would finance a $5-billion “patriotic” education fund has raised questions about the deal to allow the app to operate in the U.S.

The president said he had given “preliminary” approval for the deal that Oracle and ByteDance, the Chinese owner of the short-video app, proposed to alleviate concerns about protecting U.S. national security.

But in a new twist in the more than week-long negotiations between the companies and his administration, Trump said his team was talking to them about funding a venture that would teach American children about the “real history of our country.”

“We have a deal worked out,” Trump told supporters in North Carolina on Saturday. “They are going to pay $5 billion into a fund for education so we can educate people as to the real history of our country. We are getting very close to that deal.”

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However, ByteDance said in a statement Sunday that it had first heard about the $5-billion education fund from media reports.

The move was a “last minute” decision to allow Trump to claim he had won a victory by backing a deal that some critics say would allow China too much influence over TikTok, according to one person with direct knowledge of the matter.

ByteDance, Oracle and Walmart, which is part of the TikTok deal, agreed to create an initiative after Trump made the last-minute request. But they have had no discussions about a $5-billion commitment or any other amount, according to people familiar with the situation.

ByteDance and its new partners will not create an education program that seeks to teach American history in a manner that is tailored to any specific bias, said two people with direct knowledge of the matter.

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On Saturday, Oracle said it and the other TikTok investors would create an educational initiative “to develop and deliver an AI-driven online video curriculum to teach children from inner cities to the suburbs,” adding that the courses would range from “basic reading and math to science, history and computer engineering.”

The lack of certainty raises questions about the timing of any final approval for the deal. The Commerce Department on Friday told Apple and Google to remove TikTok from their app stores on Sunday. It later extended the deadline by one week to give the companies time to work out the final details with the administration — and pave the way for the order to remove the apps to be reversed.

In his remarks in North Carolina, Trump did not provide any detail about the $5-billion fund. But last week he said he would create a “patriotic education” initiative named the “1776 Commission,” in a reference to the year that the U.S. declared independence.

The move appeared to be a response to the New York Times, which published its 1619 Project to trace the history of the U.S. from the arrival of slaves. Some conservatives have railed against the project, which has become part of a broad debate about race after the death of George Floyd, and a series of cases where Black people have been subject to police brutality by white police officers.

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Trump has the power to approve or reject the deal on national security grounds. But it remained unclear under what legal authority he could urge the companies to fund the initiative. It was also unclear what mechanism would be used to create such a fund. The White House refused to comment and Treasury did not respond.

Last month, when Microsoft was negotiating with ByteDance over TikTok, Trump claimed that the companies would have to provide a payment to Treasury in order to win his approval. That demand stunned lawyers inside and outside the government, and eventually his own legal team told him that such a payment would not be lawful.

“Amazingly, I find that you’re not allowed to do that . . . How foolish can we be?” Trump said last week.

Oracle said TikTok would pay more than $5 billion to the Treasury in new taxes, although much of that will depend on the profitability of the social media group. ByteDance, which in addition to TikTok also runs very popular apps in China, reported $3 billion of net profit in 2019.

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Additional reporting by Kiran Stacey in Washington.

© The Financial Times Ltd. 2020. All rights reserved. FT and Financial Times are trademarks of the Financial Times Ltd. Not to be redistributed, copied or modified in any way.


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