ByteDance, the Chinese parent company of TikTok, has reached binding agreements with American and global investors concerning the majority ownership of its operations in the United States, company officials announced in an all-staff memo on Thursday. This development indicates a significant shift in the ongoing discourse around TikTok’s future in the U.S. amid national security concerns.
According to the memo from TikTok CEO Shou Zi Chew, a consortium of investors, including Oracle, Silver Lake, and the Emirati investment firm MGX, will collectively own half of the joint venture. The deal is anticipated to finalize on January 22, 2024, effectively concluding years of negotiations and pressures faced by ByteDance to divest its U.S. operations.
The agreement aligns with a previous arrangement disclosed in September, when then-President Donald Trump postponed enforcement of a mandate that would have prohibited the app unless sold to American interests. This context has been pivotal, as Washington has sought to mitigate perceived risks associated with the app, which has raised alarms over data privacy and security.
Chew emphasized in the memo that this deal will allow “over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community.” Under the outlined terms, ByteDance will maintain a minority stake of 19.9%, while Oracle, Silver Lake, and MGX will each hold a 15% share. Additionally, 30.1% of the joint venture will be allocated to affiliates of existing ByteDance investors.
The White House has indicated that Oracle will play a crucial role in the partnership by licensing TikTok’s recommendation algorithm, an aspect that has drawn scrutiny from various stakeholders. Critics, including Senate Democrat Ron Wyden of Oregon, have expressed skepticism regarding the efficacy of the agreement in protecting American users’ privacy. Wyden stated that the arrangement would not effectively mitigate risks associated with potential outside manipulation of user data.
Senator Wyden voiced concerns that the forthcoming alterations to TikTok’s recommendation algorithm, slated to be retrained on American user data, may not guarantee greater security. He has been a vocal opponent of the 2024 legislation intended to restrict TikTok unless an ownership transfer occurred, arguing for more time to address potential threats posed by the app’s ties to China.
Meanwhile, TikTok users and small business owners have also responded with caution. Tiffany Cianci, a small business entrepreneur with a substantial following on the platform, hopes that the new investors will preserve the user experience that has benefited her and many others. Cianci noted that the platform offers more favorable profit-sharing terms compared to competitors, which has motivated her to utilize TikTok for marketing her business. She has also been actively involved in efforts to mobilize support for the app, organizing protests both online and in Washington.
Despite the optimism expressed by TikTok regarding the deal, the path forward remains complex, with mixed feelings among stakeholders about the implications of the investment and ownership changes. As the agreement nears its closing date, the spotlight continues to be on how this transition will reshape TikTok’s operations and its relationship with users and regulators in the U.S.
