Over the course of the past year, TikTok has gone through a full reset of its US operations. The new ownership model must fulfill regulatory mandates and address national security issues. This step comes on the heels of mounting pressure from the US federal government. It’s a much-needed response to the increasing call for transparency into the ways platforms are managing user data.
Under the new order, TikTok’s US operations will be managed by three ‘senior US investors’ with a 15% stake each. A consortium of several of those same companies will own the other 35.1%. This group consists of the family office of tech magnate Michael Dell and Vastmere Strategic Investments, which is connected to Susquehanna International Group. This colorful cast of investors is emblematic of a move to local ownership that better fits the US legal landscape and spirit.
Oracle Corporation, the cloud computing heavyweight headed by Larry Ellison, is the key player behind this plan central to this new structure. Its responsibility is to protect the sensitive data of TikTok’s American users. It further requires the retraining of the platform’s content recommendation algorithm. This algorithm will now only consider data from US users. This shift allows Google to align with American laws that protect user privacy.
The decision to reconfigure TikTok’s US presence follows a lengthy standoff with ByteDance, the platform’s Chinese parent company. At first ByteDance was opposed to divesting its valuable algorithm, a stance that was backed by the Chinese government. That position turned on a dime when President Biden signed bipartisan legislation that went into law in 2024. As enacted, the law would require ByteDance to divest its US operations entirely or face the prospect of a ban by January 2025.
With around 200 million American users, TikTok’s influence in the social media landscape can’t be ignored. That urgency for regulatory compliance has combined with a much-accelerated timeline to create a perfect storm for these changes. The new ownership structure signifies a commitment to addressing security concerns while maintaining the platform’s operations.
Adam Presser, a former WarnerMedia executive, was named chief executive officer of TikTok’s newly-created joint venture. His leadership will no doubt help the firm navigate this changing period and fortify its connections with American stakeholders.
Mark Dooley, managing director of one of the investors, will join TikTok’s board of directors, further integrating the interests of its American investors into the company’s governance.
In light of these developments, former President Donald Trump expressed his approval via social media, stating he was “so happy to have helped in saving TikTok.” His remarks highlight the political importance focused around restructuring the platform.
“Generally, the one who introduces the technology just knows how to do it better.” – a former social media executive
Big names in the world of finance are putting their clout on the line. Silver Lake, which controls about $116 billion in assets, and MGX, an Emirati investor with a strong interest in AI and technology, highlight global interest in TikTok’s future. Their continued involvement goes beyond financial support, introducing a wider range of expertise to the universal new business model.
TikTok is in a difficult position at the moment. We’re excited to see how these changes influence both its operational strategies and the rider experience. The platform faces the ongoing challenge of balancing rapid growth with regulatory compliance while ensuring user trust amid heightened scrutiny.