To ensure that the well-known social video platform can carry on operating in the US, TikTok has entered into agreements with three significant investors: Oracle, Silver Lake, and MGX to form a new TikTok US joint venture.
An internal memo states that the acquisition is anticipated to finalize on January 22.
CEO Shou Zi Chew informed staff members that ByteDance and TikTok had signed legally binding contracts with the consortium.
“I would want to use this chance to express my gratitude for your unwavering commitment and hard work. In the message to staff, Chew said,
“Your efforts keep us operating at the highest level and will ensure that TikTok continues to grow and thrive in the U.S. and around the world.”
“With these agreements in place, we must continue to firmly focus on delivering for our users, creators, businesses, and the global TikTok community.”
A group of investors, including Oracle, Silver Lake, and the Emirati investment firm MGX, will own 15% of the new TikTok U.S. joint venture.
ByteDance will own 19.9% of the new app, while affiliates of current ByteDance investors will own an additional 30.1%. The White House and TikTok declined to comment, and the memo did not identify the other investors.
The U.S. venture will have a new seven-member majority-American board of directors. Terms that “protect Americans’ data and U.S. national security” will also apply.
User data from the United States will be kept locally in an Oracle-powered system.
Advertisers will continue to serve audiences worldwide without being impacted by the agreement, and U.S. users will continue to “enjoy the same experience as today.”
To “ensure the content feed is free from outside manipulation,” TikTok’s algorithm, which powers its captivating video feed, will be retrained using user data from the United States.
Additionally, the U.S. venture will be in charge of national policies and content management.
ByteDance’s algorithm is susceptible to manipulation by Chinese authorities, who can use it to alter material on the site in a way that is hard to detect, according to earlier warnings from US officials.
The algorithm has been at the center of the TikTok security controversy. China had previously insisted that the algorithm must continue to be governed by Chinese legislation.
However, any divestiture of TikTok must result in the platform severing its connection to ByteDance, particularly concerning the algorithm, according to a bipartisan U.S. regulation.
The agreement puts an end to years of speculation regarding the future of the well-known video-sharing website in the US.
The platform was scheduled to go black on the law’s January 2025 date after broad bipartisan majorities in Congress passed and President Joe Biden signed a bill that would prohibit TikTok in the United States if it did not find a new owner in place of China’s ByteDance.
It did for a few hours.
However, President Donald Trump signed an executive order on his first day in office to keep it operating while his administration attempts to come to a deal for the company’s sale.
Trump continued to extend the date for a TikTok deal with three more executive orders, all of which had no clear legal foundation.
The second occurred in April, when White House officials thought they were getting close to a deal to split off TikTok into a new business with American ownership.
However, the deal fell through when China withdrew after Trump announced tariffs.
Trump claimed that the third, which occurred in June, and another in September, will permit TikTok to carry on operating in the US in a manner that satisfies national security requirements.
In the United States, TikTok has over 170 million subscribers.
According to a Pew Research Center study released last fall, 43% of American adults under 30 claim to routinely obtain news from TikTok, more than any other social media platform, including YouTube, Facebook, and Instagram.
In after-hours trading, Oracle shares increased $9.07, or 5%, to $189.10.
