TikTok seals deal for new American joint venture to avoid US ban
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TikTok’s Chinese owner, ByteDance, finalised a deal on Jan 22 to set up a majority American-owned joint venture company to avoid a US ban.
PHOTO: AFP
WASHINGTON - TikTok and its Chinese parent ByteDance have closed a long-awaited deal to transfer parts of its US operations to American investors, securing the popular video app’s future in the United States and avoiding a nationwide ban.
The social media company has officially established a US entity with three managing investors: Oracle, private equity firm Silver Lake Management and Abu Dhabi-based investment company MGX.
TikTok chief executive Chew Shou Zi, who is Singaporean, will continue running ByteDance’s most valuable asset globally, and gets a seat on the board. His lieutenant Adam Presser will helm the American venture as CEO.
A TikTok sale concludes a years-long geopolitical and regulatory tug-of-war that, for half a decade, has threatened to shut down TikTok in the US over national security concerns.
The US Congress originally passed legislation in 2024 to ban the app unless ByteDance sold TikTok – citing concerns that the Chinese government could abuse access to US user data or use the app to push narratives preferred by Beijing.
TikTok has maintained neither has happened.
The venture’s valuation remains unclear, but US Vice-President J.D. Vance has cited a price tag of about US$14 billion (S$17.9 billion). The worth of TikTok’s American business – which spans advertising, e-commerce and live streaming – has been estimated at US$35 billion to US$50 billion in the past.
A deal was initially supposed to be done by January 2025 to avoid a ban, but US President Donald Trump extended the deadline for a deal on several occasions to give TikTok more time.
The resolution, years after a potential ban was first discussed, is a win for small businesses, big brands and content creators whose livelihoods depend on TikTok, and for the roughly 200 million US users who frequent the app each month for news and entertainment.
Under the arrangement – originally announced by the Trump administration in September – new investors including Oracle, Silver Lake and MGX will own 50 per cent of the new TikTok US entity.
Existing ByteDance investors will control 30.1 per cent of the new company, and ByteDance will hold 19.9 per cent, in accordance with the law.
The new entity will be responsible for moderating content on TikTok and protecting US users’ data.
It will be governed by a new, seven-member majority-American board.
Oracle, already a long-time TikTok cloud computing partner, will serve as a security guard charged with ensuring TikTok is following the law.
Still, critics have argued that the arrangement does not adequately adhere to the US national security law passed in 2024 under the Biden administration that forced a spin-off, and it is unclear if any of those critics will challenge the deal.
That law stipulates that ByteDance can have no operational relationship with US TikTok. TikTok says its joint venture has been established in compliance with Mr Trump’s September executive order.
The deal the White House put forward allows ByteDance to lease a copy of its content algorithm to the forthcoming US TikTok entity, retraining the new algorithm on US user data.
ByteDance is also expected to maintain control over valuable parts of its US TikTok business, including its advertising division and fast-growing e-commerce arm TikTok Shop. BLOOMBERG
