TikTok has made a key deal to prevent the app from being banned in the U.S. by creating a new company that American investors will mostly own. The Chinese investors of the app, ByteDance, said this new company, TikTok USDS Joint Venture LLC, will run TikTok’s operations in the U.S. and ensure the data of American users remains safe. The new app will also control what people see. By locking the deal, American and global investors will hold 80.1% of the company, while ByteDance will retain 19.9%, leaving China with very little control over TikTok’s U.S. business.
The main investors in the new company are Oracle, Silver Lake, and MGX, an investment company based in Abu Dhabi, each owning a 15% stake. Other investors include the Dell Family Office, Alpha Wave Partners, Revolution, Via Nova, and NJJ Capital. A White House official has confirmed that both the U.S. and Chinese governments have approved the deal, which will help reduce long-term concerns about data security. These concerns began in 2020, when U.S. President Donald Trump tried to ban TikTok, fearing that Americans’ data could be shared with China.
In the new agreement, TikTok USDS will store all U.S. user data and TikTok’s recommendation system on Oracle’s servers located in the U.S. The company will test and improve how videos are shown to users using only data from American users, while maintaining strict security for users’ data. The positions of Adam Presser and Will Farrell will be as CEO and chief security officer, respectively, and TikTok’s global CEO, Shou Chew, will also serve on the board.
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ByteDance will still handle revenue-generating activities such as advertising and online shopping through a separate company it fully owns. The new venture, meanwhile, will generate revenue by providing technology and data services to support TikTok’s U.S. operations.
