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TikTok has secured its future in the United States through a landmark deal that creates a new American entity, effectively ending years of regulatory uncertainty that threatened the platform used by more than 200 million Americans.
The social video giant announced Thursday it has signed agreements with major investors including Oracle, Silver Lake, and Emirati investment firm MGX to form a U.S.-based joint venture. According to the company’s statement, this new structure will implement “defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation and software assurances for U.S. users.” American users will experience no disruption, continuing to use the same app they’ve grown accustomed to.
Former TikTok head of operations and trust and safety Adam Presser will step into the role of CEO for the new venture. He’ll work alongside a seven-member board of directors with a majority of American members, including current TikTok CEO Shou Chew.
President Donald Trump celebrated the agreement on his Truth Social platform, specifically thanking Chinese leader Xi Jinping “for working with us and, ultimately, approving the Deal.” Trump added his hope that “long into the future I will be remembered by those who use and love TikTok.”
The deal marks the resolution of a saga that began with bipartisan congressional action earlier this year. When President Joe Biden signed legislation that would ban TikTok in the U.S. unless it found a new owner to replace China’s ByteDance by January 2025, the platform’s future appeared uncertain. For several hours, the service went dark. However, upon taking office, President Trump signed an executive order to keep TikTok operational while his administration worked toward a compromise.
“China’s position on TikTok has been consistent and clear,” remarked Chinese Foreign Ministry spokesperson Guo Jiakun on Friday, echoing previous statements from China’s embassy in Washington.
Data security forms a cornerstone of the new arrangement. Under the agreement, all U.S. user data will be stored locally within a system operated by Oracle. Perhaps more significantly, the joint venture addresses concerns about TikTok’s powerful algorithm, which has been central to security debates surrounding the platform.
The content recommendation system, which tailors video feeds to individual user preferences and keeps millions engaged for hours, will be retrained, tested and updated specifically on U.S. user data. This represents a significant shift, as China had previously insisted the algorithm must remain under Chinese control by law. The new arrangement appears to have ByteDance licensing the algorithm to the U.S. entity for retraining.
However, questions remain about how this arrangement complies with the legislation passed with bipartisan support, which explicitly prohibits “any cooperation with respect to the operation of a content recommendation algorithm” between ByteDance and a new American ownership group.
“Who controls TikTok in the U.S. has a lot of sway over what Americans see on the app,” noted Anupam Chander, a professor of law and technology at Georgetown University, highlighting the continued significance of algorithm control in the digital media landscape.
The ownership structure of the new joint venture divides control among several major players. Oracle, Silver Lake, and MGX each hold a 15% stake as managing investors. Additional investment comes from Michael Dell’s investment firm, while ByteDance retains a 19.9% minority position in the venture.
The agreement marks a pivotal moment in U.S.-China technology relations and potentially sets precedent for how cross-border digital platforms might navigate increasingly complex geopolitical tensions in the future.
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8 Comments
While the national security concerns around TikTok are understandable, I hope this new structure doesn’t diminish the platform’s core appeal and creativity for users. Maintaining that unique character will be crucial.
As someone who uses TikTok, I’m relieved to see a resolution that allows the platform to continue operating in the U.S. The app has become an important part of how I discover new content and stay connected.
The involvement of Oracle, Silver Lake, and UAE investors adds an intriguing geopolitical dimension to this deal. I wonder how that will shape the new entity’s strategic direction and partnerships.
Good point. The diversity of stakeholders could lead to interesting synergies, but may also create complexities in terms of aligning priorities and interests.
This deal raises questions about the future of U.S.-China tech relations. Will it set a precedent for other Chinese-owned apps and services to follow a similar path of localization and oversight?
That’s a good point. The TikTok case could have broader implications for how the U.S. government approaches Chinese tech companies operating in the country.
This TikTok deal seems like a pragmatic compromise to address national security concerns while preserving the platform for American users. It’ll be interesting to see how the new U.S. entity navigates the regulatory landscape going forward.
Agreed, the data protection and content moderation safeguards will be crucial. Maintaining trust with users will be key for TikTok’s long-term success in the U.S.