TikTok clinches deal for new US joint venture to avoid American ban

WASHINGTON, USA – TikTok’s Chinese owner, ByteDance, on Thursday, January 22, said it has finalized a deal to establish a majority American-owned joint venture that will secure US data, to avoid a US ban on the short video app used by over 200 million Americans.

The deal is a milestone for the social media firm after years of battles that began in August 2020 when President Donald Trump unsuccessfully tried to ban the app over national security concerns.

TikTok USDS Joint Venture LLC will secure US user data, apps and algorithms through data privacy and cybersecurity measures, ByteDance said.

The agreement provides for American and global investors to hold 80.1% of the venture while ByteDance will own 19.9%.

TikTok USDS JV’s three managing investors — cloud computing giant Oracle, private equity group Silver Lake, and Abu Dhabi-based investment firm MGX —will each hold 15%.

A White House official told Reuters that the US and Chinese governments had signed off on the deal. The Chinese Embassy in Washington did not immediately comment.

Details of the deal are in line with those outlined in September, when Trump delayed until January 23 enforcement of a law that would ban the app unless its Chinese owner sold it amid efforts to extract the company’s US assets.

Trump last year said the deal met the terms of divestiture requirements under the 2024 law. The White House in September said the venture would operate TikTok’s US app. Interested parties have yet to disclose elements of the deal such as the business relationships between the venture and ByteDance.

The president has more than 16 million followers on his personal TikTok account and credited the app with helping him win reelection. He received a document from TikTok on December 22 touting how popular he is on the app, showed a photo published this month by the New York Times. The White House also launched an official TikTok account in August.

TikTok said investors in the venture include Dell Family Office — investment firm of Dell Technologies founder Michael Dell — plus Vastmere Strategic Investments, Alpha Wave Partners, Revolution, Merritt Way, Via Nova, Virgo LI and NJJ Capital.

Former TikTok USDS figures Adam Presser and Will Farrell have been appointed CEO and chief security officer respectively.

TikTok CEO Shou Chew was also named to the venture’s board; he leads TikTok’s global businesses and strategy.

The venture will retrain, test and update TikTok’s content recommendation algorithm on US user data and the algorithm will be secured in Oracle’s US cloud, TikTok said.

In September, Reuters reported, citing sources, that ByteDance would maintain ownership of TikTok’s US business operations but would cede control of the app’s data, content and algorithm to the venture.

The venture will serve as backend operations to the US company and handle US user data and the algorithm, sources said at the time. They said a separate division wholly owned by ByteDance would control revenue-generating business operations such as e-commerce and advertising.

The new venture will receive a portion of revenue for its technology and data services, the sources added. – Rappler.com