TikTok's Chinese owner, ByteDance, has reached agreements with three investors to form a joint venture to operate the app in the U.S. This should protect TikTok from government blocking and end the long-standing uncertainty surrounding its future.
TikTok's Chinese owner, ByteDance, has reached agreements with three investors to form a joint venture to operate the app in the U.S. This should protect TikTok from government blocking and end the long-standing uncertainty surrounding its future.
“We have signed agreements with investors to create a new TikTok joint venture in the United States, which will allow more than 170 million Americans to continue to discover a world of limitless opportunities as part of an important global community,” TikTok CEO Shou Ji Chu said in a memo to employees, which was seen by Reuters .
Under the deal, US and global investors will own 80.1% of the shares, while ByteDance will retain 19.9% of the shares of the new joint venture after its sale.
Chu said the joint venture would “operate as an independent entity with authority over data protection in the US, algorithm security, content moderation and software assurance.”
Despite the asset divestiture requirements, Chu added that TikTok Global's US units "will manage global product compatibility and certain commercial activities, including e-commerce, advertising and marketing."
Oracle, Silver Lake and Abu Dhabi-based MGX are the lead investors and will jointly own 45% of the new company, called TikTok USDS Joint Venture LLC. Another 30.1% will go to affiliates of the parent company’s current investors, while 19.9% will remain with ByteDance itself.
The agreement for TikTok’s U.S. operations will see ByteDance appoint one of the seven members of the new entity’s board of directors, with most of the other seats to be filled by Americans. TikTok also said the U.S. joint venture will be “responsible for U.S. data protection, algorithm security, content moderation and software quality control.”
Oracle will become TikTok’s “trusted security partner.” It will oversee compliance and be responsible for safeguarding the privacy of U.S. users’ data. All of this data will be stored in an isolated cloud storage facility in the United States, managed by Oracle.
