TikTok’s parent company, ByteDance, has finalised an agreement to establish a majority American-owned joint venture, TikTok USDS Joint Venture LLC, to secure U.S. user data, apps, and algorithms. This move aims to address long-standing national security concerns that previously threatened a ban on the popular short-video app, which boasts over 200 million American users. The deal marks a significant milestone for the social media firm following years of scrutiny, which began in August 2020 when then-President Donald Trump sought to ban the app.
While Trump later opted not to enforce a law requiring ByteDance to divest its U.S. assets, the creation of TikTok USDS JV ensures that American and global investors will hold 80.1% of the venture, with ByteDance retaining 19.9%. Key managing investors in the venture include cloud computing giant Oracle, private equity group Silver Lake, and Abu Dhabi-based investment firm MGX, each holding 15%. TikTok is a video-sharing social networking service that allows users to create and share short videos. ByteDance is a Chinese multinational internet technology company headquartered in Beijing.
According to reports, the newly formed entity will manage U.S. user data and the algorithm, while a separate division wholly owned by ByteDance will oversee revenue-generating activities such as e-commerce and advertising. The venture will receive a portion of revenue for its technology and data services. The content recommendation algorithm will be retrained, tested, and updated using U.S. user data and secured in Oracle’s U.S. cloud.
Former TikTok USDS executives Adam Presser and Will Farrell have been appointed CEO and chief security officer of the new venture, respectively. TikTok CEO Shou Chew has also been named to the venture’s board. The agreement has garnered praise from both sides, with Trump acknowledging Chinese President Xi Jinping’s role in approving the deal.
