By Sarah Nassauer, Michael C. Bender and Andrew Restuccia
WASHINGTON -- Backers of plans for Oracle Corp. to join with TikTok to create a new U.S. company for the video-sharing app are working on a new ownership structure aimed at alleviating U.S. concerns over Chinese control.
Under the latest iteration of a fluid deal, Oracle and Walmart Inc. could together own a significant stake, according to people familiar with the situation. That move, if combined with existing American investors, could put majority ownership in U.S. hands, the people said.
Walmart Chief Executive Doug McMillon is expected to get a board seat if the deal goes through, said some of the people familiar with the matter. As part of the current plan, TikTok would file for a U.S. initial public offering in about a year, said one of these people.
Trump administration officials have pushed for majority U.S. ownership of TikTok, which is owned by Beijing-based ByteDance Ltd. That goal could be met under the proposal for Oracle alone, or together with Walmart, to take significant ownership stake, which, together with participation from existing U.S.-based ByteDance investors like Sequoia Capital, General Atlantic and Coatue Management LLC could push U.S. ownership in the new entity above 50%.
The situation is highly fluid and it is far from clear what the final terms of any deal will ultimately be. Mr. Trump and Chinese authorities must also sign off on any deal.
Mr. Trump has privately voiced concerns over the deal, and those reservations were echoed publicly on Thursday by White House chief of staff Mark Meadows, who cautioned that a transaction that leaves the company predominantly Chinese-controlled might not meet the president's standards.
"My big concern is if all we're doing is repackaging it and still keeping it as a predominantly Chinese government-run company, that would not set well with the original goals the president outlined," Mr. Meadows told reporters at the White House.
Mr. Meadows said the administration is still reviewing the details of the agreement.
Mr. Trump on Wednesday expressed discomfort with any agreement that leaves ByteDance Ltd., the Beijing-based company that owns TikTok, with majority ownership of the company's U.S. operations. "Conceptually, I can tell you, I don't like that," he told reporters.
ByteDance's push to retain majority ownership is causing widespread concerns within the administration and among some Senate Republicans. Senior Trump administration officials are hoping to give American investors a majority share of the company that will take over TikTok, according to people familiar with the matter.
The Journal reported Wednesday that Trump administration officials were working toward a structure that would give American investors and companies a majority share of the company that will take over the Chinese-owned video-sharing app TikTok.
In a conference call on Wednesday night, ByteDance officials agreed to significant strengthening of the data security and data management aspects of the proposal, according to a person familiar with the matter. Treasury Secretary Steven Mnuchin participated in the call, this person said.
The 20-page agreement, highly technical in nature, amounted to a Treasury counterproposal on the security issues, the person said. Those had emerged as the most significant concerns in the TikTok negotiations for some China hawks, even overshadowing the issue of corporate ownership and control.
In a further complication, Chinese authorities will have to approve the terms of the deal, Bytedance noted on Thursday -- so any deal struck by Oracle and ByteDance would face scrutiny from Beijing as well as the White House.
One factor that may make it easier to gain Chinese approval is that Mr. Trump has dropped the demand for a payment to the U.S. Treasury in case of a deal. When Mr. Trump late Wednesday told reporters that the government was unable to accept a payment for brokering the deal, it was seen internally in ByteDance as helpful to getting Beijing to approve it, people familiar with the situation said.
The issue wasn't a major factor in an agreement, but the condition was considered an added hurdle. Chinese authorities saw the demand as bullying, one of the people said, making it troublesome symbolically.
--John D. McKinnon, Raffaele Huang and Miriam Gottfried contributed to this article.
Write to Sarah Nassauer at email@example.com, Michael C. Bender at Mike.Bender@wsj.com and Andrew Restuccia at Andrew.Restuccia@wsj.com