TikTok has announced a groundbreaking restructuring of its U.S. operations, creating a new joint venture called TikTok USDS Joint Venture LLC. This move is part of ByteDance’s response to U.S. national security concerns and legal requirements surrounding the popular social media platform.
Oracle’s Role as Technology Partner
Under the agreement, Oracle, alongside Silver Lake and Abu Dhabi’s MGX, has taken center stage as the joint venture’s trusted technology partner. Oracle will oversee the storage and protection of all sensitive U.S. user data through its highly secure cloud computing centers. This ensures TikTok complies with strict national security requirements.
Oracle will also audit and monitor the joint venture to validate its compliance with U.S. national security terms. With its robust cybersecurity infrastructure, Oracle’s involvement highlights the growing synergy between social media platforms and cloud technology.
Ownership Breakdown and Governance
The newly established TikTok USDS joint venture will be majority-owned by American and global investors, holding 80.1% of the entity. ByteDance, however, will retain a 19.9% stake. Notably, Oracle, Silver Lake, and MGX each own 15%, while other ByteDance investors hold approximately 30% collectively. This financial structure bolsters U.S.-based control over TikTok’s operations within the country.
A seven-member governing board, with an American majority, will supervise the joint venture’s crucial decisions. ByteDance will appoint one of the board members to ensure a level of continuity between ByteDance’s global operations and the U.S.-based entity.
National Security Compliance and Business Operations
One of the critical aspects of this deal is adapting TikTok’s powerful recommendation algorithm. The algorithm will now undergo training exclusively on U.S. user data to maintain adherence to data privacy laws while safeguarding national security. The joint venture will manage data protection, algorithmic integrity, content moderation, and other operational necessities.
Separately, ByteDance will oversee advertising, e-commerce, and global marketing operations, ensuring interoperability between TikTok’s international users and its U.S. operations. Revenue from these functions will support both ByteDance and the joint venture through a sharing agreement.
What’s Next for TikTok and Global Tech
The deal, valuing TikTok’s U.S. business at a staggering $14 billion, is expected to close by January 22, 2025, meeting key deadlines set under national security law. This landmark transaction, endorsed by prominent U.S. and global investors, ensures that TikTok operations continue to thrive while meeting evolving regulatory landscapes.
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