Key Takeaways
1. ByteDance has finalized a deal to keep TikTok operational in the US by creating a new entity, TikTok USDS Joint Venture LLC.
2. The new structure allows TikTok’s US operations to be managed independently from ByteDance starting January 22.
3. The joint venture has agreements with three main investors: Oracle, Silver Lake, and MGX, with MGX indicating some non-American ownership.
4. The ownership breakdown includes Oracle, Silver Lake, and MGX owning about 45%, ByteDance owning 19.9%, and affiliates of ByteDance investors owning roughly 30.1%.
5. TikTok plans to retrain its algorithm using American user data to avoid external content manipulation, though details on implementation remain unclear.
TikTok users in the US can now feel a sense of relief, as ByteDance has finalized a deal that ensures the app will remain operational in the nation. According to CNBC, ByteDance has decided to place TikTok’s US operations under a new framework that gives majority control to a group of investors led by American companies.
New Structure for US Operations
Shou Zi Chew, TikTok’s CEO, shared with employees that the US sector of the company will be managed by a newly created entity called TikTok USDS Joint Venture LLC. This arrangement enables TikTok to serve its 170 million users in the US while officially disconnecting its American operations from ByteDance’s direct oversight. The new agreement is scheduled to commence on January 22, just one day before the expiration of an executive order that halted the enforcement of the Protecting Americans from Foreign Adversary Controlled Applications Act.
Investor Agreements
In his internal communication, Chew noted that the joint venture has secured agreements with three managing investors: Oracle, the private equity firm Silver Lake, and the investment firm MGX based in Abu Dhabi. While this group of investors is often referred to as US-led, MGX’s involvement indicates that the ownership is not entirely American. Nevertheless, this is largely the same coalition that US officials previously showed willingness to approve during earlier talks that were hindered by political and regulatory concerns.
Ownership Breakdown
According to the reported ownership details, Oracle, Silver Lake, and MGX will collectively possess around 45% of the new US entity. Affiliates of current ByteDance investors are expected to own roughly 30.1%, while ByteDance itself will keep a 19.9% share. The company will also function under a new board structure, comprising seven directors, with a majority anticipated to be US citizens.
One of the most delicate aspects of the negotiations has consistently been TikTok’s algorithm. US officials have long maintained that oversight of the recommendation system could enable indirect influence over the content presented to users. In his message to staff, Chew indicated that the new US entity will retrain the algorithm utilizing American user data to ensure that the content feed is not subject to external manipulation. How this retraining will be implemented in reality, and the degree to which it will be independent from ByteDance’s global systems, is still unclear.
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