The deal stipulates that a new US entity will run the company in compliance with a 2024 law
TikTok has launched a joint venture to maintain its US operations in a deal negotiated with the US administration, reported the Wall Street Journal.
The agreement stipulates that the company will be run by a new US entity managed by US-friendly investors. TikTok’s deputy CEO, Adam Presser, will helm this entity, and cloud computing company Oracle will supervise TikTok’s data-management and algorithm-training on US-based users.
The deal, which was approved by both the US and China’s governments, was drafted to comply with a 2024 national security law that required TikTok parent ByteDance to divest the company’s US assets or be blocked in the US. TikTok challenged the law in court, engaging lawyers like Mayer Brown partner Andrew Pincus. TikTok content creators joined the legal bout as well, with Stanford Law School professor Jeffrey Fisher acting on their behalf.
Current US president Donald Trump had dragged his feet on the law’s implementation to keep TikTok active and inked executive orders to lengthen the company’s deadline for finalizing a deal.
“The majority American owned joint venture will operate under defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation and software assurances for U.S. users,” TikTok CEO Shou Chew said in an internal memo, a snippet of which was published by WSJ.
Chew will sit on the JV’s board alongside Oracle executive Ken Glueck and investors. Current TikTok investors hold approximately 30 percent of the shares in the new entity; Oracle, Silver Lake, and MGX each hold 15 percent of its stakes. ByteDance holds about 20 percent interest.
The US government is reportedly collecting a multibillion-dollar fee from investors for arranging the agreement. Other investors include Revolution and Michael Dell’s family investment office.
Lawmakers and security watchdogs raised concerns that through ByteDance, China could still influence TikTok’s US entity. According to TikTok, 200 million of its users are based in the US.
