US TikTok’s algorithm will be retrained to ensure that the content feed is ‘free from outside manipulation’.
TikTok’s US operations will be housed under a new joint venture, passing majority control to US tech giant Oracle, private equity firm Silver Lake and the Abu Dabi-based MGX.
The deal resolves the regulatory limbo TikTok found itself in earlier this year, skirting a ban in the country thanks to numerous extensions granted by US president Donald Trump.
According to a memo by TikTok CEO Shou Zi Chew, the three managing investors, Oracle, Silver Lake and MGX, will hold 15pc each of the new entity – together holding nearly half of the venture.
30.1pc will be held by affiliates of some existing investors of TikTok’s parent company ByteDance, while 19.9pc will be retained by ByteDance.
The new US joint venture would be “majority owned by American investors, governed by a new seven-member majority-American board of director, and subject to terms that protect Americans’ data and US national security”, Chew noted in the memo seen by news outlets.
The US entity will be responsible for protecting user data in the country, managing content moderation and ensuring that the recommendation algorithm is protected.
The new TikTok entity will also retrain the app’s algorithm on US user data to ensure the feed is “free from outside manipulation”, the memo said. In addition, global US entities are expected to manage global product interoperability, as well as e-commerce, advertising and marketing.
The widely anticipated deal took nearly a year to materialise, with Trump postponing TikTok’s ban in the US until a deal was able to be made.
On 20 January, Trump signed the first order delaying the ban for 75 days. In April, he extended it again and then in June he extended the delay until September. In September, he extended the delay until 16 December.
In September, US and Chinese officials neared a deal on the social media app. Reports of Oracle co-founder and chief technology officer and Trump supporter Larry Ellison’s involvement began surfacing later that month.
As per the memo, Oracle – in addition to being a managing investor – will serve as the “trusted security partner” responsible for auditing and validating TikTok US to ensure that it complies with the “agreed upon national security terms”.
Sensitive data from the estimated 170m TikTok users in the US will be stored in Oracle’s US-based data centres. Recently, US vice-president JD Vance placed the new entity’s value at $14bn.
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