TikTok Owner ByteDance Moves to Avoid US Ban With JV
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ByteDance, a Chinese company that owns the popular video platform TikTok, recently signed a binding agreement to form a joint venture that might help it avoid the US ban, as reported by Reuters.
The report says that ByteDance’s new agreement will hand control of operations of TikTok’s US app to American and global investors, which represents a major step toward avoiding a ban in the country, and will end years of uncertainty.
The deal represents a big milestone for the short video app, which is used daily by over 170 million Americans. By now, TikTok has been in constant battle with the US authorities for over five years, after the first issues started in August 2020.
Back then, US President Donald Trump tried to ban the app, citing national security concerns. The move was unsuccessful at the time, but the conflict never went away.
Known Terms of The US-TikTok Deal
The details of the deal are in line with what was outlined in September, when Trump delayed the enforcement of the law that would ban the app until January 20. The condition to avoid this outcome was for TikTok’s Chinese owners to sell it amid efforts to extract TikTok’s US assets from the global platform.
Trump also declared that the deal met the terms of the divestiture requirements under a 2024 law.
US Vice President JD Vance said in September that the new US company will be valued at $14 billion, which was below the analysts’ estimates. However, the final figure was not made public on Thursday, when the deal was announced, as noted by Reuters.
The report mentioned that under the terms of the agreement, both American and global investors – including a private equity group Silver Lake, Abu Dhabi-headquartered MGX, and a cloud computing giant Oracle – will hold 80.1% stake in the new TikTok USDS Joint Venture LLC. The remaining 19.9% will stay in ByteDance’s ownership.
Back in September, the White House said that the new joint venture would operate TikTok’s US app. However, there are still some unanswered questions regarding the deal, such as the business relationships between ByteDance and the new joint venture. Following the announcement of the deal, the White House refused to answer any questions about the deal.
Meanwhile, TikTok CEO Shou Zi Chew told employees that the joint venture would act as an independent entity. It would hold authority over US data protection, algorithm security, content moderation, and software assurance. Chew also said that US entities of ByteDance-controlled TikTok “will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing” separately from the joint venture.
