TikTok has reached a deal with a group of investors to establish a new joint venture, potentially averting a ban in the United States. The agreement, reported by US media, involves Oracle, Silver Lake, and Abu Dhabi-based MGX, and aims to address concerns over the social media platform’s Chinese ownership.
Averting a Ban
According to an internal memo from TikTok CEO Shou Chew, the new entity will allow TikTok to continue operating in the US. ByteDance, TikTok’s parent company, will retain nearly 20 percent ownership – the maximum permitted under current law – while one-third will be held by existing ByteDance investors.
This arrangement comes in response to legislation passed under President Joe Biden that compelled ByteDance to either sell TikTok’s US operations or face a ban in its largest market. Concerns from US policymakers, including during Trump’s first presidency, center on the potential for China to access user data or influence the platform through its algorithm.
Data Security and Control
The US joint venture, as outlined by Chew, will function as an independent entity with authority over key areas including US data protection, algorithm security, content moderation, and software assurance. TikTok Global’s US entities will continue to manage global product interoperability and commercial activities like e-commerce, advertising, and marketing.
The deal follows a September announcement from the White House regarding a framework for American ownership of TikTok. The agreement still requires approval from the Chinese government to proceed.
What Happens Next?
If approved by the Chinese government, the joint venture could allow TikTok to continue operating in the US without facing a ban. However, the future ownership structure of TikTok Global’s US entities remains unclear. It is possible that ByteDance could continue to exert influence over these operations. Further delays or complications in the approval process could lead to renewed calls for a ban. The involvement of Larry Ellison, a close associate of Donald Trump, could also introduce further political dynamics into the situation.
Frequently Asked Questions
What prompted this deal?
The deal was prompted by a law passed under President Joe Biden that required ByteDance to sell TikTok’s US operations or face a ban.
Who are the major investors in the new venture?
The major investors are Oracle, Silver Lake, and Abu Dhabi-based MGX.
What percentage of the US venture will ByteDance own?
ByteDance will retain nearly 20 percent ownership, the maximum allowed under the terms of the law.
As TikTok navigates this complex restructuring, how might this shift in ownership and control impact the platform’s content and user experience?
