SAN FRANCISCO — TikTok has signed agreements with three major investors – Oracle, Silver Lake and MGX – to form a new TikTok joint venture in the US, ensuring the popular social video platform can continue to operate in the United States.
The deal is expected to close on Jan. 22, according to an internal memo reviewed by The Associated Press. In a message, CEO Shu Zi Chu confirmed to employees that ByteDance and Tik Tok signed binding agreements with the consortium.
Half of TikTok's new US joint venture will be owned by a group of investors including Oracle, Silver Lake and Emirati investment firm MGX, each of which will own 15%. According to the memo, 19.9% of the new application will be owned by ByteDance itself, and another 30.1% will be owned by affiliates of existing ByteDance investors.
The board of directors of the American company will have a new composition of seven members, in which the majority will be Americans, the memorandum says. It will also be subject to terms that “protect Americans’ data and U.S. national security.”
US user data will be stored locally on a system managed by Oracle.
TikTok's algorithm – the secret sauce behind its addictive video stream – will be retrained on data from US users to “ensure that the content stream is free from external manipulation,” the note said. The American enterprise will also oversee content moderation and policy within the country.
U.S. officials have previously warned that ByteDance's algorithm is vulnerable to manipulation by Chinese authorities, who could use it to shape content on the platform in ways that make it difficult to detect.
The algorithm has been a central issue in the debate over TikTok's security. China has previously argued that the algorithm should remain under Chinese control by law. But the US ruling, passed with bipartisan support, said any sale of TikTok must mean the platform sever ties – specifically the algorithm – with ByteDance.
The deal marks the end of years of uncertainty over the fate of the popular video-sharing platform in the United States. After a broad bipartisan majority in Congress passed – and President Joe Biden signed into law – legislation that ban TikTok in the US If it had not found a new owner instead of China's ByteDance, the platform would have had to shut down by the January 2025 deadline set by law. This was the case for several hours. But on his first day in office, President Donald Trump signed order to continue his work while his administration is trying to negotiate the sale of the company.
Three more executive orders followed as Trump continued to extend the deadline for the TikTok deal without a clear legal basis. the second was in Aprilwhen White House officials believed they were close to an agreement to spin off TikTok into a new U.S.-owned company, which fell apart after China reneged on Trump's tariff announcement. The third one has arrived in Juneand then another in September that Trump said would allow TikTok to continue operating in the United States in a way that is in national security interests.
TikTok has more than 170 million users in the US.
