ByteDance, the parent company of TikTok, signed a new agreement to give up control over most of the app’s U.S. activities. Through the deal, the U.S. government campaign to force a sale on national security grounds comes to an end, establishing a new joint venture led by American investors.
In the memo, Shou Chew, the CEO of ByteDance, called the new agreement a “new TikTok U.S. joint venture.” According to the memo, the partnership is set to close on January 22, 2026.
American investors gain key responsibilities in TikTok
The memo said that the new agreement would give American investors power over the U.S.-based company. Under the agreement, the recently formed investor group includes Cloud giant Oracle, tech-focused private equity firm Silver Lake, and AI-focused Abu Dhabi-based investment firm MGX.
Oracle, Silver Lake, and AI-focused Abu Dhabi-based investment firm MGXs will jointly own 45 percent of the U.S. operation. The remaining 20 percent is being held by ByteDance.
The memo indicated that the U.S. joint venture shall be liable for software assurance, algorithm security, content moderation, and U.S. data protection. The joint venture will be in charge of the retraining of the U.S. content recommendation algorithm.
The retraining of the U.S. content will ensure that the content feed does not contain any external interference.
In the new alliance, the U.S. joint venture will have Oracle as a formidable security partner once the acquisition has been completed. The memo stated that a trusted security partner will conduct an audit and meet the requirements of the National Security guidelines.
Through the agreement, TikTok Global’s U.S. entities will oversee global product interoperability and specific commercial activities, such as e-commerce, advertising, and marketing. The U.S. joint venture will function as an independent entity with control over U.S. data protection, algorithm security, content moderation, and software assurance.
According to the memo, a large portion of the agreement is similar to the wording of an executive order that U.S. President Trump signed in September. The sale of TikTok’s U.S. business to an American investor group was also authorized in that document.
Trump said during a briefing with reporters that He received clearance from Xi Jinping, the president of China.
Vice President JD Vance said that as a result of the deal, TikTok U.S. would be worth “around $14 billion.”
CFIUS and the Biden administration influence TikTok’s U.S. operations
The Committee on Foreign Investment in the United States (CFIUS) issued a Divestment order on August 14, 2020. CFIUS order required ByteDance to sell off TikTok’s U.S. company due to national security concerns.
According to the order, CFIUS required TikTok either to liquidate its American business or face a ban. The U.S. Congress passed the Act.
According to the White House Report, the sell-off Order of August 14, 2020, reserved the ability to issue additional orders involving ByteDance to preserve U.S. national security. The report stated that the Framework Agreement and a CFIUS-approved agreement with U.S. investors ensured that economic incentives were aligned with national security safeguards.
The Committee on Foreign Investment in the United States process and lawmakers requested a structural cure from both sides, building distinct U.S. operations. The White House report noted that the structural cure limited foreign access to data and critical systems, and assigned verification to an American security partner.
The White House report noted that TikTok has an estimated 170 million subscribers in the U.S.
On September 19, ByteDance stated that “it will work in accordance with applicable laws to ensure TikTok remains available to American users through TikTok U.S.” However, ByteDance has not yet officially agreed to the agreement or presidential order.
Sharpen your strategy with mentorship + daily ideas – 30 days free access to our trading program
Source: https://www.cryptopolitan.com/tiktok-strikes-deal-to-shift-u-s-control/
