ByteDance Strikes JV Agreement for Management of TikTok US

TikTok’s Chinese owner, ByteDance, has signed binding agreements with three American investors – Oracle, Silver Lake and MGX – to form a joint venture to operate TikTok’s US app.

Why it matters:

• ByteDance has for years been under pressure from the US government to divest its US business due to national security concerns.

• After a lengthy period of uncertainty, this JV shores up the future of the video-sharing app in the US.

How it will work:

• The US joint venture will be 50% held by a consortium of new investors, of which Oracle, Silver Lake and MGX will own 15% each.

• 30.1% will be held by affiliates of existing ByteDance investors.

• The remaining 19.9% will be retained by ByteDance.

• The US venture will have a new, seven-member American-majority board of directors.

• US user data will be stored locally in an Oracle-run system.

• There will also be provisions to “protect Americans’ data and US national security,” as per a staff memo from TikTok CEO Shou Zi Chew.

• TikTok’s algorithm will be retrained on US data to ensure it isn’t susceptible to outside manipulation.

• The US venture will also oversee content moderation and policies within the US.

• The deal is expected to close on January 22.

What they said:

• Shou Zi Chew, in a staff memo: “We have signed agreements with investors regarding a new TikTok US joint venture, enabling over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community.”