TikTok’s owner ByteDance said it has finalized a deal to establish a majority-owned joint venture to secure U.S. data, and avoid a ban. ByteDance said TikTok USDS Joint Venture LLC will secure U.S. user data, apps and algorithms through data privacy and cybersecurity measures. It disclosed few details about the divestiture.
President Donald Trump said via a social media post that Tiktok “will now be owned by a group of Great American Patriots and Investors, the Biggest in the World.” He also thanked his Chinese counterpart Xi Jinping “for working with us and, ultimately, approving the Deal.”
“He could have gone the other way, but didn’t, and is appreciated for his decision,” Trump said.
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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 include cloud computing giant Oracle, private equity group Silver Lake (SILAK.UL) and Abu Dhabi-based investment firm MGX. Each of these investors will hold 15%.
A White House official told Reuters that the U.S. and Chinese governments had signed off on the deal. The Chinese Embassy in Washington did not immediately comment.
This deal is taking place in order to comply with a law — which went into effect in January this year — bans TikTok unless ByteDance divests approximately 80% of its U.S. assets to non-Chinese investors. Trump extended the deadline on the issue multiple times.
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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.
TikTok said the venture will retrain, test and update TikTok’s content recommendation algorithm on U.S. user data and the algorithm will be secured in Oracle’s U.S. cloud.
A memo sent by Chew in September suggested that the ByteDance-controlled global TikTok entity will continue to manage e-commerce, advertising and marketing on the new U.S. platform. Meanwhile the venture will reportedly serve as backend operations to the U.S. company and handle U.S. user data and the algorithm. The new venture is also to receive a portion of revenue for its technology and data services.