TikTok Signs Deal to Sell U.S. Unit to American and UAE Investors
TikTok has signed a deal to sell its U.S. unit to major investors, including UAE-based MGX, Oracle, and Silver Lake, ensuring that the popular social video platform can continue operating in the U.S. The deal is expected to be completed by January 22.
TikTok has signed an agreement to transfer its U.S. operations to a joint venture formed by three investors: Oracle, Silver Lake, and UAE-based MGX. The deal aims to ensure the social media platform continues to operate in the U.S. while addressing concerns regarding data security.
According to internal communications, the new U.S. venture will be 50% owned by the investor consortium, with each investor Oracle, Silver Lake, and MGX holding a 15% stake. ByteDance, TikTok’s China-based parent company, will retain a 19.9% stake, while ByteDance-affiliated investors will hold the remaining 30.1%. The new entity will operate independently and will have a seven-member board, the majority of whom will be American.
TikTok to Focus on Data Security and Algorithm Independence
This deal addresses U.S. concerns regarding the Chinese government’s access to American user data. TikTok CEO Shou Zi Chew stated in internal communications that the U.S. venture will have full authority over data protection, algorithm security, content moderation, and software assurance. This will ensure the platform complies with U.S. regulations.
An important condition of the deal is that U.S. user data will be stored in a local system managed by Oracle. This will ensure the data is protected from foreign interference. Additionally, TikTok’s algorithm, which powers its video feed, will be retrained using U.S. user data, thus ensuring the platform’s protection from external manipulation. This step is intended to alleviate concerns that the Chinese government could access data or manipulate content on the platform.
TikTok to Continue Managing Certain Commercial Activities
Chew also noted that TikTok’s global entities would continue to manage product interoperability and certain commercial activities, including e-commerce, advertising, and marketing. This sale comes after months of speculation regarding who would acquire Tik Tok’s U.S. operations. The U.S. Congress had called for Tik Tok to be sold to a U.S.-based company due to concerns that ByteDance’s Chinese ownership could lead to American user data being transferred to Beijing.
Facilitated by Washington, this sale resolves one of the largest points of tension between the U.S. and China. The agreement is seen as a significant step in reducing national security risks posed by foreign ownership of social media platforms. According to the deal, ByteDance will license its AI-based recommendation technology to the newly established U.S. TikTok entity. This technology is at the core of Tik Tok’s success and will operate securely through a partnership with Oracle.