TikTok on Thursday said it has signed a joint venture deal with investors that would allow the company to maintain operations in the US and avoid a ban threat over its Chinese ownership.
TikTok CEO Shou Chew (周受資) told employees that the social media company and its Chinese owner, ByteDance, had agreed to the new entity, with Oracle, Silver Lake and MGX on board as major investors, an internal memo said.
Oracle executive chairman and founder Larry Ellison is a longtime ally of US President Donald Trump.
Photo: Reuters
“The US joint venture will be responsible for US data protection, algorithm security, content moderation and software assurance,” Chew said in the memo. “It will also have the exclusive right and authority to provide assurances that content, software and data for American users is secure.”
Chew told staff that half the venture would be held by a consortium of new investors including Oracle, Silver Lake and MGX — which would have 15 percent each.
Affiliates of existing ByteDance investors would own a touch more than 30 percent of the venture, with Bytedance retaining just shy of 20 percent, the maximum ownership allowed for a Chinese company under the law.
TikTok Global’s US entities would manage global product interoperability, and certain commercial activities, including e-commerce, advertising and marketing, the memo said.
Chew said there is more work to be done ahead of the Jan. 22 next year closing date for the deal.
The new set-up is in response to a law passed under former US president Joe Biden that forced ByteDance to sell TikTok’s US operations or face a ban in its biggest market.
US policymakers, including Trump in his first presidency, warned that China could use TikTok to mine data from Americans or exert influence through its state-of-the-art algorithm.
Trump has delayed enforcement through successive executive orders, most recently extending the deadline into next month.
Bytedance did not immediately comment on the deal, but experts said it was a compromise that had averted the blow of losing access to the lucrative US market.
“Keeping the US operation live is itself a victory” for Bytedance, technology consultancy Dolphin founder Li Chengdong (李成東) said.
Settling the issue allows Bytedance to focus on new ventures, including artificial intelligence projects, and could help it move toward an initial public offering, Li said.
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