TikTok finalizes a deal to form a new American entity – JS
TikTok Finalizes Deal to Create New American Entity
By KAITLYN HUAMANI
TikTok has reached an agreement to establish a new American entity, averting the potential ban in the United States that has been looming over the platform utilized by over 200 million Americans.
The social video platform company has entered into partnerships with key investors such as Oracle, Silver Lake, and the Emirati investment firm MGX to launch the new TikTok U.S. joint venture. The revamped version will operate under safeguards aimed at protecting national security through robust data protections, algorithm security, content moderation, and software assurances for U.S. users, as stated in a release on Thursday. American users of TikTok can continue using the app as usual.
President Donald Trump commended the deal in a post on Truth Social, expressing gratitude to Chinese leader Xi Jinping for collaborating and ultimately approving the agreement. Trump also expressed his hope of being remembered by TikTok users for years to come.
Adam Presser, former head of operations and trust and safety at TikTok, will serve as the CEO of the new venture. He will be supported by a seven-member board of directors, predominantly American, which includes TikTok’s CEO Shou Chew.
The completion of this deal puts an end to the uncertainty surrounding the fate of the popular video-sharing platform in the United States. Following the passage of a law by wide bipartisan majorities in Congress, and its signing by President Joe Biden, TikTok faced a potential ban in the U.S. if a new owner wasn’t found to replace China’s ByteDance. The platform was on the verge of shutdown by the law’s January 2025 deadline, but President Donald Trump’s executive order on his first day in office kept it operational while negotiations for the sale continued.
Regarding the TikTok deal and Trump’s Truth Social post, Guo Jiakun, a Chinese Foreign Ministry spokesperson, reiterated China’s stance, echoing a previous statement from the Chinese embassy in Washington.
In addition to prioritizing data protection by storing U.S. user data locally through Oracle, the joint venture will focus on revamping TikTok’s algorithm. The content recommendation system, responsible for tailoring videos to user preferences, will undergo retraining, testing, and updates using U.S. user data.
The algorithm has been a key point of contention in the security debate surrounding TikTok. While China insisted on retaining control over the algorithm by law, the U.S. regulation stipulated that any divestment of TikTok must involve cutting ties, specifically with the algorithm, from ByteDance. In this deal, ByteDance will license the algorithm to the U.S. entity for retraining.
Given the law’s prohibition on cooperation related to the operation of a content recommendation algorithm between ByteDance and a potential new American ownership group, the extent of ByteDance’s continued involvement remains uncertain.
“The control of TikTok in the U.S. holds significant influence over the content seen by Americans on the app,” stated Anupam Chander, a professor of law and technology at Georgetown University.
Oracle, Silver Lake, and MGX are the three primary investors, each holding a 15% stake. Other investors include the investment firm of Michael Dell, the billionaire founder of Dell Technologies. ByteDance retains a 19.9% share in the joint venture.
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Associated Press writers Chan Ho-him in Hong Kong and Didi Tang in Washington contributed to this report.
