TikTok US deal finialise to avoid ban, credit: X
Chinese video sharing platform TikTok on Thursday announced that it had set up a joint venture in which majority of stakes are owned by American investors to run it operations in United States. This step is taken to help the company to avoid a ban due to its Chinese ownership.
The newly formed TikTok USDS Joint Venture LLC will offer its services to over 200 million users and 7.5 million businesses. The company also claimed that it will take strict measures to safeguard users’ data, secure its algorithms, and manage content moderation.
This TikTok-US deal is a major achievement for the Chinese company after years of disputes that started in August 2020, when the US President Donald Trump tried to ban the platform citing national security concerns.
The company reported that in the newly formed LLC the investment firm of Dell Technologies founder Michael Dell, along with Vastmere Strategic Investments, Alpha Wave Partners, Revolution, Merritt Way, Via Nova, Viro LI, and NJJ Capital are key investors of the deal.
Adam Presser, who is the former executive of TikTok USDS, is appointed as the new chief executive officer, whereas Will Farrell is also former TikTok USDS executive and has been appointed as chief security officer.
As per the deal, the American and global investor were set to hold 80.1 per cent of the newly formed company, while ByteDance, the Chinese firm to hold 19.9 per cent of the venture.
TikTok JV’s three managing investors include cloud firm Oracle, Private equity group Silver Lake, and Abu Dhabi based investment firm MGX, which would own 15 per cent each.
The information regarding the new deal still remains in line with those shared in September, when President Trump delayed enforcement of law until 23rd January. The law would ban the platform until and unless its Chinese owners sold it, as part of efforts to separate the company’s US assets.
TikTok claimed that the new company will test and update the content recommendation algorithm with the help of US user data. The algorithm would be stored in Oracle’s US-based cloud system.
The White House has proposed a plan that allows the ByteDance to lease a copy of its content algorithm to the new US TikTok entity. ByteDance was also supposed to manage key areas of its US venture which consist of its advertisement unit and TikTok Shop.
The platform is also banned in India since June 2020 due to National security concerns and sovereignty and integrity issue. However, after the US deal the company has basically become a US based firm with majority of non-chinese stake holders the company can try to return to India advocating itself a US firm.
Syed Ziyauddin is a media and international relations enthusiast with a strong academic and professional foundation. He holds a Bachelor’s degree in Mass Media from Jamia Millia Islamia and a Master’s in International Relations (West Asia) from the same institution.
He has work with organizations like ANN Media, TV9 Bharatvarsh, NDTV and Centre for Discourse, Fusion, and Analysis (CDFA) his core interest includes Tech, Auto and global affairs.
Tweets @ZiyaIbnHameed
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