TikTok's US Operations Saved by Deal with American Investors
TikTok has finalized a deal to transfer its American operations to a joint venture majority-owned by U.S. investors, effectively avoiding a ban that had been looming for years. The agreement addresses national security concerns that previously threatened the app's presence in the United States.
Key Details of the Deal
The deal involves the creation of a new entity called TikTok USDS Joint Venture LLC. Key aspects of the agreement include:
- Ownership: American and global investors will hold 80.1% of the venture, while ByteDance will retain a 19.9% stake.
- Managing Investors: Oracle, Silver Lake, and MGX will serve as the managing investors, each holding a 15% stake.
- Data Security: The new app will operate under defined safeguards, including data protection, algorithm security, and content moderation.
- Leadership: Adam Presser, formerly TikTok's head of operations and trust and safety, has been appointed CEO of the new venture. Shou Chew will remain CEO of TikTok globally and will also have a seat on the new board.
Background of the Deal
Concerns about TikTok's Chinese ownership and potential risks to user data and content control have been circulating for years. These concerns led to legislative efforts to ban the app unless it separated from ByteDance.
In 2024, a bipartisan law was passed mandating that ByteDance sever ties with TikTok's American operations or face a ban from U.S. app stores and web hosting services. The Supreme Court upheld this law, setting a deadline of January 19, 2025. While the ban went into effect, President Trump signed executive orders to keep the app running while seeking an agreement for the sale of the company.
Safeguards and Operations
TikTok has stated that the new entity will operate with comprehensive data protections and strict content moderation. Oracle will play a critical role in ensuring compliance with local laws, overseeing algorithm integrity and user data flows. The company also stated that the U.S. version of the app would be interoperable with the global version, ensuring that Americans will still have access to global content.
Investors
The agreement provides for American and global investors to hold 80.1 percent of the venture while ByteDance will own 19.9 percent. In addition to Oracle, Silver Lake and MGX, investors include Dell Family Office, Vastmere Strategic Investments, Alpha Wave Partners, Revolution, Merritt Way, Via Nova, Virgo LI and NJJ Capital.
Conclusion
The finalized deal marks the end of a long period of uncertainty for TikTok in the United States. By establishing a majority American-owned venture, TikTok has addressed the regulatory concerns that threatened its operations. The new structure aims to safeguard user data and ensure the platform's continued availability in the U.S.
