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TIKTOK OWNER BYTEDANCE SIGNS DEAL TO FORM U.S. JOINT VENTURE, RETAINS STAKE
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CapitalTimesNews / 2 months
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- 2 min read
TikTok’s Chinese owner, ByteDance, signed binding agreements with three major investors to form a new U.S. joint venture, a significant step aimed at averting a U.S. government ban after years of uncertainty. The deal, unveiled on Thursday, will see American and global investors hold an 80.1% stake in the new entity, named TikTok USDS Joint Venture LLC. ByteDance will retain a 19.9% stake. The three managing investors are Oracle, Silver Lake, and MGX, who will collectively own 45% of the venture. “We have signed agreements with investors regarding a new TikTok U.S. joint venture, enabling over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community,” TikTok CEO Shou Zi Chew told employees in a memo. The agreement addresses national security concerns that sparked a legal battle beginning in August 2020. It aligns with a framework presented in September, when former President Donald Trump delayed enforcement of a law that would ban the app unless its Chinese owners sold it. Trump declared the deal met the divestiture requirements of a 2024 law. Chew stated the joint venture will “operate as an independent entity with authority over U.S. data protection, algorithm security, content moderation and software assurance.” However, Rush Doshi, a former official on the National Security Council, noted it was unclear if the algorithm had been fully transferred, licensed, or was still owned and controlled by Beijing, suggesting Oracle might merely provide “monitoring.” Despite the divestiture, Chew added that TikTok global’s U.S. entities “will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing.” Previous reports from Chinese media indicated ByteDance would continue to play a major role, with a planned U.S. entity set to receive some revenue from the new joint venture. The White House, which in September acknowledged the new joint venture would operate TikTok’s U.S. app, has stated questions remain about the deal.