Social video platform company, TikTok, has finalized a deal to create a new American entity.
This avoids the looming threat of a ban in the United States that has been in discussion for years on the platform now used by more than 200 million Americans.
The social video platform company has signed agreements with major investors including Oracle, Silver Lake and the Emirati investment firm MGX to form the new TikTok US joint venture.
Adam Presser, who previously worked as TikTok’s Head of operations and trust and safety, will lead the new venture as its CEO. He will work alongside a seven-member, majority-American board of Directors that includes TikTok’s CEO Shou Chew.
The company said in a statement that the new version will operate under “defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation and software assurances for US users.” American TikTok users can continue using the same app.
Apart from an emphasis on data protection, with US user data being stored locally in a system run by Oracle, the joint venture will also focus on TikTok’s algorithm.
The company said in its announcement that the content recommendation formula, which feeds users specific videos tailored to their preferences and interests, will be retrained, tested and updated on US user data.
The algorithm has been a central issue in the security debate over TikTok. China previously maintained the algorithm must remain under Chinese control by law.
However, the US regulation passed with bipartisan support said that any divestment of TikTok must mean the platform cuts ties, specifically the algorithm, with ByteDance.
Under the terms of this deal, ByteDance would license the algorithm to the US entity for retraining.
The law prohibits “any cooperation with respect to the operation of a content recommendation algorithm” between ByteDance and a new potential American ownership group, so it is unclear how ByteDance’s continued involvement in this arrangement will play out.
Oracle, Silver Lake and MGX are the three managing investors, each holding a 15% share. Other investors include the investment firm of Michael Dell, the billionaire founder of Dell Technologies. ByteDance retains 19.9% of the joint venture.
The safeguards provided by the Joint Venture will also cover CapCut, and Lemon8, and a portfolio of other apps and websites in the US.
Trump Hails TikTok’s New US Joint Venture
US President, Donald Trump praised the deal in a Truth Social post, thanking Chinese leader Xi Jinping specifically “for working with us and, ultimately, approving the Deal.”
Trump added that he hopes “that long into the future I will be remembered by those who use and love TikTok.”
The deal ends years of uncertainty about the fate of the popular video-sharing platform in the United States. After wide bipartisan majorities in Congress passed and President Joe Biden signed a law that would ban TikTok in the US if it did not find a new owner in the place of China’s ByteDance, the platform was set to go dark on the law’s January 2025 deadline.
It did for a several hours but on his first day in office, President Donald Trump signed an executive order to keep it running while his administration sought an agreement for the sale of the company.
Guo Jiakun, a Chinese Foreign Ministry Spokesperson in Beijing, said about the TikTok deal and Trump’s Truth Social post, that China’s position on TikTok has been “consistent and clear,” echoing an earlier statement from the Chinese embassy in Washington.
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