Investor deal is a ‘new TikTok US joint venture’

The seemingly never-ending story of TikTok and its place in the US could be coming to an end. A new deal between TikTok’s parent company ByteDance and US investors allows the social platform to continue operating in the country.

Reports from CNBC say that TikTok has signed an agreement to create a new US joint venture. The arrangement involves a number of big investors, and the resulting entity is known as TikTok USDS Joint Venture LLC.

In a memo sent to employees, ByteDance CEO Shou Zi Chew reveals that the new joint venture will be “majority owned by American investors, governed by a new seven-member majority-American board of directors, and subject to terms that protect Americans’ data and U.S. national security”.

There has been an ongoing battle between ByteDance and the US to find a solution to security concerns about having a Chinese-operated social platform operating in the US. Various deals have been proposed, delayed, and tweaked over the last year or so, but now it seems that things have finally been sorted out.

As CNBC reports:

TikTok CEO Shou Zi Chew told employees on Thursday that the company’s US operations will be housed in a new joint venture.

The entity is named TikTok USDS Joint Venture LLC, according to a memo sent by Chew and obtained by CNBC. As part of the joint venture, Chew said the company has signed agreements with the three managing investors: Oracle, Silver Lake, and Abu Dhabi-based MGX. He said that the deal’s “closing date” is Jan. 22.

The memo explains that the new entity will be responsible for protecting US data, securing the algorithm, and moderating content in the country.

The arrangement will see around half of the new entity held by the new investors. ByteDance will retain one fifth and a little over 30 percent will be held by affiliates of existing ByteDance investors.

Axios breaks down the details of the new deal as follows:

The U.S. joint venture will be responsible for U.S. data protection, algorithm security, content moderation and software assurance, per the memo.

• It will be responsible for "retraining the content recommendation algorithm on US user data to ensure the content feed is free from outside manipulation."
• "A trusted security partner will be responsible for auditing and validating compliance with the agreed upon National Security Terms, and Oracle will be the trusted security partner upon completion of the transaction," the memo notes.
• Upon the closing, the US joint venture "will operate as an independent entity with authority over US data protection, algorithm security, content moderation and software assurance, while TikTok global's US entities will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing," it adds.

The new deal places a value of around $14 billion on TikTok US.

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