SAN FRANCISCO: Tik Tok has signed agreements with three major investors Oracle, Silver Lake and MGX to form a new Tik Tok US joint venture, ensuring the popular social video platform can continue operating in the United States. The deal is expected to close on Jan. 22, according to an internal memo seen by The Associated Press. In the communication, CEO Shou Zi Chew confirmed to employees that Byte Dance and TikTok signed the binding agreements with the consortium.
“I want to take this opportunity to thank you for your continued dedication and tireless work. Your efforts keep us operating at the highest level and will ensure that TikTok continues to grow and thrive in the US. and around the world .” Chew wrote in the memo to employees. “With these agreements in place, our focus must stay where it’s always been firmly on delivering for our users creators, businesses and the global Tik Tok community.”
Half of the new TikTok U.S. joint venture will be owned by a group of investors among them Oracle, Silver Lake and the Emirati investment firm MGX, who will each hold a 15% share. 19.9% of the new app will he held by Byte Dance itself and another 30.1% will be held by affiliates of existing Byte Dance investors, according to the memo. The memo did not say who the other investors are and both Tik Tok and the White House declined to comment.
The U.S. venture will have a new, seven-member majority American board of directors, the memo said. It will also be subject to terms that “protect Americans’ data and US, national security”. U.S. user data will be stored locally in a system run by Oracle. The memo said U.S. users will continue “enjoying the same experience as today” and advertisers will continue to serve global audiences with no impact from the deal.
Tik Tok’s algorithm the secret sauce that powers its addictive video feed will be retrained on U.S. user data to “ensure the content feed is free from outside manipulation,” the memo said. The US. venture will also oversee content moderation and policies within the country. American officials have previously warned that ByteDance’s algorithm is vulnerable to manipulation by Chinese authorities, who can use it to shape content on the platform in a way that’s difficult to detect. The algorithm has been a central issue in the security debate over Tik Tok.
China previously maintained the algorithm must remain under Chinese control by law. But the US. regulation passed with bipartisan support said any divestment of Tik Tok must mean the platform cuts ties specifically the algorithm with ByteDance. The deal marks the end of years of uncertainty about the fate of the popular video-sharing platform in the United States.
After wide bipartisan majorities in Congress passed and President Joe Biden signed a law that would ban TikTok in the US. if it did not find a new owner in the place of China’s Byte Dance, the platform was set to go dark on the law’s January 2025 deadline. For a several hours, it did. But on his first day in office, President Donald Trump signed an executive order to keep it running while his administration tries to reach an agreement for the sale of the company.
