TikTok Signs Joint Venture Deal to End US Ban Threat
TikTok announced that it had entered into a joint venture agreement with investors, enabling the company to continue operating in the United States and circumvent the risk of a ban due to its Chinese ownership, according to US media.
TikTok's CEO Shou Chew informed staff that the social media firm and its Chinese parent company ByteDance had consented to the new entity, with Oracle, Silver Lake, and Abu Dhabi-based MGX participating as primary investors.
Larry Ellison, Oracle's executive chairman and founder, has been a close supporter of US President Donald Trump for many years.
Chew informed employees that one-third of the US venture will be owned by current ByteDance investors, while almost 20 percent will be kept by ByteDance—this is the greatest ownership permitted for a Chinese firm as per legal regulations.
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The updated arrangement for TikTok comes as a reaction to legislation enacted during Trump's administration; Joe Biden has compelled ByteDance to divest TikTok's US operations or confront a prohibition in its largest market.
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US policymakers, such as Trump during his initial term, have cautioned that China might exploit TikTok to gather data from Americans or manipulate users via its advanced algorithm.
Trump has consistently postponed enforcement via a series of executive orders, with the latest extension pushing the deadline to January.
The agreement mainly validates a September statement from the White House, indicating that a new partnership has been established with China and will comply with the stipulations of the 2024 legislation.
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"After the closure, the US joint venture will function as an independent organization with control over US data security, algorithm integrity, content oversight, and software reliability," Chew stated in the memo.
At the same time, "the US entities of TikTok Global will oversee global product interoperability and specific commercial functions, such as e-commerce, advertising, and marketing," he stated.