Key Takeaways
- TikTok has signed a deal to sell its U.S. business to three American investors: Oracle, Silver Lake, and MGX.
- The deal is expected to close on January 22 and ensures the popular social video platform can continue operating in the United States.
- The new TikTok U.S. joint venture will be owned by a consortium of investors, with Oracle, Silver Lake, and MGX each holding a 15% share.
- The U.S. venture will have a new, seven-member majority-American board of directors and will be subject to terms that protect Americans’ data and U.S. national security.
- U.S. user data will be stored locally in a system run by Oracle, and TikTok’s algorithm will be retrained on U.S. user data to ensure the content feed is free from outside manipulation.
Introduction to the Deal
TikTok has signed a deal to sell its U.S. business to three American investors: Oracle, Silver Lake, and MGX. This deal ensures the popular social video platform can continue operating in the United States. According to an internal memo seen by The Associated Press, the deal is expected to close on January 22. CEO Shou Zi Chew told employees in the memo that ByteDance and TikTok have signed binding agreements with the three investors. This deal marks the end of years of uncertainty about the fate of the popular video-sharing platform in the United States.
Details of the Deal
The new TikTok U.S. joint venture will be owned by a consortium of investors, with Oracle, Silver Lake, and MGX each holding a 15% share. Another 30.1% will be held by affiliates of existing ByteDance investors, and 19.9% will be retained by the China-based ByteDance. The U.S. venture will have a new, seven-member majority-American board of directors. This board will oversee the company’s operations in the United States and ensure that it complies with all relevant laws and regulations. The U.S. venture will also be subject to terms that "protect Americans’ data and U.S. national security." This means that the company will have to take steps to protect the data of its U.S. users and ensure that it does not pose a threat to national security.
Data Storage and Algorithm
U.S. user data will be stored locally in a system run by Oracle. This means that the data will be stored on servers located in the United States, rather than in China or other countries. This is a key concession, as there have been concerns about the potential for the Chinese government to access data stored by TikTok. The company’s algorithm, which powers its addictive video feed, will also be retrained on U.S. user data. This will ensure that the content feed is free from outside manipulation and that it is tailored to the interests of U.S. users. The U.S. venture will also oversee content moderation and policies within the country. This means that the company will have to develop and implement policies for moderating content on its platform, and that it will have to ensure that these policies comply with U.S. laws and regulations.
Background to the Deal
The deal marks the end of years of uncertainty about the fate of the popular video-sharing platform in the United States. After wide bipartisan majorities in Congress passed a law that would ban TikTok in the U.S. if it did not find a new owner in the place of China’s ByteDance, the platform was set to go dark on the law’s January 2025 deadline. However, President Donald Trump signed an executive order to keep it running while his administration tried to reach an agreement for the sale of the company. This was followed by three more executive orders, as Trump continued to extend the deadline for a TikTok deal. The second executive order was signed in April, when White House officials believed they were nearing a deal to spin off TikTok into a new company with U.S. ownership. However, this deal fell apart after China backed out following Trump’s tariff announcement.
Conclusion
The deal between TikTok and the three American investors is a significant development for the company and its users in the United States. It ensures that the popular social video platform can continue operating in the United States and provides a framework for the company’s operations in the country. The deal also addresses concerns about data storage and national security, and provides a new governance structure for the company. Overall, the deal is a positive development for TikTok and its users, and it provides a framework for the company’s continued growth and success in the United States. As the company moves forward, it will be important for it to continue to prioritize the needs and concerns of its users, and to ensure that it complies with all relevant laws and regulations. By doing so, TikTok can continue to provide a popular and innovative platform for social video sharing, while also addressing the concerns of its users and regulators.