TikTok has successfully finalised a comprehensive deal to create a new American entity, effectively sidestepping the imminent threat of a ban in the United States that has loomed for several years. The social video platform company has signed definitive agreements with major investors, including Oracle, Silver Lake and the Emirati investment firm MGX, to form the TikTok U.S. joint venture.
New Safeguards and Leadership Structure
The newly established version of TikTok will operate under what the company describes as "defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation and software assurances for U.S. users." This announcement was made in an official statement released on Thursday. Importantly, American TikTok users will be able to continue using the same application without interruption.
Adam Presser, who previously served as TikTok's head of operations and trust and safety, has been appointed to lead the new venture as its Chief Executive Officer. He will collaborate closely with a seven-member board of directors, which boasts a majority-American composition and includes TikTok's CEO, Shou Chew.
End of Prolonged Uncertainty
This agreement signifies the conclusion of years of speculation regarding the future of the immensely popular video-sharing platform within the United States. The situation escalated after broad bipartisan majorities in Congress passed legislation, subsequently signed into law by President Joe Biden, which mandated a ban on TikTok unless it secured a new owner to replace China's ByteDance.
Facing a deadline of January 2025 under this law, the platform was poised to be shut down. For a brief period of several hours, it indeed went dark. However, on his inaugural day in office, President Donald Trump issued an executive order to maintain its operation while his administration pursued a negotiated agreement for the company's sale.
Enhanced Data Protection and Algorithm Focus
In addition to a strong emphasis on data security, which involves storing U.S. user data locally within a system managed by Oracle, the joint venture will also concentrate on TikTok's proprietary algorithm. The company has confirmed that the content recommendation formula, responsible for delivering tailored videos to users based on their preferences and interests, will be retrained, rigorously tested, and updated using data from American users.
Investment and Ownership Details
Oracle, Silver Lake and MGX are identified as the three managing investors, each holding a significant 15% share in the venture. Other notable investors include the investment firm of Michael Dell, the billionaire founder of Dell Technologies. ByteDance, the original parent company, will retain a 19.9% stake in the newly formed joint venture.
