TikTok signed an agreement on Thursday under which approximately 80 percent its US assets will be sold to a group of investors. The deal ensures that the social media platform can continue to operate in the United States.
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The sale means TikTok will avoid a U.S. government ban and remain available to its more than 170 million users in the United States, company CEO Shou Zi Chew told employees.
The company told employees on Thursday that ByteDance and TikTok have signed binding agreements with Oracle, Silver Lake and MGX to form a new U.S. TikTok joint venture, TikTok USDS Joint Venture LLC.
50 percent shares in the joint venture will belong to a consortium of new investors, including Oracle, Silver Lake and MGX based in Abu Dhabi (15% each); 30.1 percent will be owned by affiliates of current ByteDance investors; and 19.9 percent will be retained by ByteDance, the memo said, adding that the company will have a new seven-member board of directors with a majority of Americans and will “protect Americans' data and U.S. national security.”
Chinese owner divests TikTok in US
TikTok's algorithm will be retrained using U.S. user data to “ensure the content feed is free from external manipulation,” the memo said. The joint venture will also oversee content moderation and policy in the United States.
The transaction is expected to be finalized on January 22. The agreement will end years of uncertainty surrounding efforts to force ByteDance to divest its U.S. business after numerous threats to shut down the company on U.S. national security grounds.
TikTok, and by extension its parent company, ByteDance, have long been a concern for the U.S. government. US lawmakers have long suspected that ByteDance shares confidential user data of US citizens with China.
Another allegation is that China uses TikTok's algorithm to spread propaganda and disinformation, even when users do not actively select such content.
TikTok's fate has been uncertain since 2020, when Donald Trump tried to ban the app during his first term.
Later, the Joe Biden administration passed a law requiring TikTok to withdraw from operations in the US or be removed from the app store by January 2025. In January, the app became unavailable in the US for hours.
But Trump, on his first day back in office, signed executive orders extending the deadline and postponing the potential ban. It kept the video-sharing app operating in the U.S., granting the company three more extensions during the year.
