ByteDance, TikTok’s Chinese parent company, has entered into binding agreements with U.S. and international investors. This agreement will divest most of its US operations, allaying bipartisan national security fears over the popular social media application. TikTok’s chief executive, Shou Zi Chew, confirmed the new arrangement to company employees on Thursday. As it stands now, it is scheduled to close on January 22, 2024.
The raiding agreements are a significant new day in the ownership of property. Retrofitting Affiliates of existing ByteDance investors now control 30.1% of TikTok. This ownership structure allows ByteDance to maintain a minority stake. It addresses, finally, the perennial bugaboos of U.S. legislators over data privacy and security.
The deal follows years of urging from Washington for ByteDance to sell-off its U.S. operations. In April 2024, during President Joe Biden’s administration, Congress passed legislation aimed at banning TikTok unless it was sold due to ongoing national security apprehensions. That’s exactly what the previous administration under President Donald Trump worked to do with the sale. In September, Trump disclosed that he had written to China’s President Xi Jinping, who supposedly blessed the deal.
In September, Trump delayed implementation of the ban. This decision permitted exclusive negotiations to play out while the administration developed a framework for transferring ownership. The law is currently set to go into effect on January 20, 2025. It went through three years of delays as players grappled with the intricacies of launching a multilateral, multijurisdictional business deal.
Under the new joint venture, a consortium of investors that includes Oracle and Walmart now own 50% of TikTok. This consortium counts Oracle, Silver Lake, and the Emirati investment firm MGX. The goal of this collaboration is to give users and regulators confidence that TikTok’s content moderation becomes fully in accordance with U.S. laws and regulations.
Chew’s memo to employees emphasized the importance of this deal for TikTok’s future in the American market. He noted that it would allow “over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community.” This principal nicely demonstrates the platform’s commitment to its users. That’s an impressive number given the company’s continued claim to be one of the most important players on the social media scene.
The agreement signals the end of an important effort to appease regulatory complaints without undermining the core tenets that keep the platform in operation. Familiar names, like established investment firms Oracle and Silver Lake are making moves. Their support will fortify TikTok’s infrastructure against unwarranted foreign access and improve transparency in its operations.
As the deal progresses toward its closing date, industry analysts will closely monitor how this shift in ownership affects TikTok’s business model and user engagement strategies moving forward. The potential sale would provide a much more permanent and stable presence for them in the U.S. That would go a long way towards assuaging fears about its Chinese ownership.