TikTok has reached an agreement to establish a new American company, bypassing the pending risk of a ban in America, which has been debated for years on the platform where over 200 million Americans now use it.
The social video platform firm agreed with big investors such as Oracle, Silver Lake and Emirati investment company MGX to create the new TikTok U.S. joint venture.
According to the statement issued by the company on 19th January, “the new version will be used with the protection of national security under the established safeguards ensuring comprehensive data protection, algorithm security, content moderation and software assurances to the U.S. users. The American TikTok users will be able to use the same application.”
In a post on Truth Social, former President Donald Trump applauded the deal by specifically attributing it to the efforts of Chinese leader Xi Jinping, who he said collaborated with the U.S. and at last signed the Deal. Trump also says that he wishes to be remembered by those who use and love TikTok many years down the road.
The new venture will be headed by Adam Presser, the former head of operations and trust and safety at TikTok, who will be the CEO of the new venture. He will collaborate with a board of directors (majority American) of seven people, including the CEO of TikTok, Shou Chew.
The purchase leaves years of speculation on the future of the well-known video-sharing platform in the United States. With a law passed by Congress by wide bipartisan majorities, signed by President Joe Biden, which would ban TikTok in the U.S. should it not be sold to a new owner in place of Chinese-based ByteDance, the site would be shut down by the Jan. 2025 deadline of the law. For several hours, it did. However, on the first day he assumed office, President Donald Trump signed an executive order to allow it to continue operating as his administration tried to get the company to agree to a sale.
“The Chinese have been quite clear in their stance regarding TikTok”, Guo Jiakun, a spokesperson of the Foreign Ministry in Beijing, said Friday on the TikTok deal and a Trump post on Truth Social, repeating an earlier comment by the Chinese embassy in Washington.
Besides the focus on data protection, as U.S. user data will be stored within the country in a system operated by Oracle, the joint venture will also be concerned with the algorithm of TikTok. The content recommendation formula that serves users with related videos according to their tastes and interests will be retrained, tested and trained again on the U.S. user data, as the company announced.
The algorithm became one of the key points of the security discussion around TikTok. Formerly, China ensured that the algorithm was under the law of Chinese control. However, the U.S. rule to divest its TikTok business, which was bipartisan, stated that any divestment of the site would imply the disconnection of the program with ByteDance, that is, the algorithm. According to the conditions of this transaction, the algorithm would be licensed by ByteDance to the U.S. entity to be retrained.
The legislation also bans any form of collaboration with regard to the functioning of a content suggestion engine between ByteDance and a new prospective American ownership body, and thus, it is unknown how the further engagement of the former in this deal will unfold.
The question of who is in charge of TikTok in the United States has a significant influence on what the American population watches on the app, according to Anupam Chander, a professor of technology and law at Georgetown University.
The three managing investors are Oracle, Silver Lake and MGX with a share of 15, 15 and 15, respectively. The investment firm of Michael Dell, the billionaire founder of Dell Technologies, is also an investor. Retention of the joint venture is 19.9% by ByteDance.
