TikTok Establishes US Joint Venture to Address Data Security Concerns
TikTok has announced the formation of a majority American-owned joint venture, TikTok USDS Joint Venture LLC, to operate its US business. This move aims to alleviate concerns over the company’s Chinese ownership and ensure compliance with US regulations. The joint venture will serve over 200 million users and 7.5 million businesses in the US, implementing strict safeguards for data protection, algorithm security, and content moderation.
The new structure is a response to a law passed under President Joe Biden’s administration, which required Chinese-owned ByteDance to sell TikTok’s US operations or face a ban. The law was enacted due to concerns that China could use TikTok to collect American users’ data or exert influence through its algorithm. Former President Donald Trump, who initially delayed enforcement of the law, has welcomed the deal and claimed credit for its establishment.
Under the joint venture, ByteDance will retain a 19.9% stake, below the 20% threshold stipulated by the law. Other investors, including Silver Lake, Oracle, and Abu Dhabi-based AI investment fund MGX, will each hold 15% stakes. Oracle’s executive chairman, Larry Ellison, a longtime Trump ally, will play a significant role in the venture. The joint venture will have decision-making authority over trust and safety policies and content moderation for US users, while TikTok’s global entities will manage international product integration and commercial activities.
To address data security concerns, US user data will be stored in Oracle’s secure cloud environment, with cybersecurity audited by third-party experts and adhering to federal standards. The joint venture will be governed by a seven-member, majority-American board, including TikTok CEO Shou Chew and executives from major investment firms.
The establishment of the joint venture marks a significant development in the ongoing debate over TikTok’s operations in the US. The company has faced scrutiny from US policymakers, who have raised concerns about the potential risks associated with its Chinese ownership. The new structure is expected to provide greater transparency and accountability, while ensuring the continued operation of the popular social media platform in the US.
The deal is valued at around $14 billion, although the final pricing will be determined by investors. The joint venture is expected to play a crucial role in shaping the future of social media in the US, with implications for data security, algorithm transparency, and content moderation. As the social media landscape continues to evolve, the establishment of the TikTok US joint venture is a significant step towards addressing the concerns of US policymakers and users alike.
