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TikTok CEO Shou Zi Chew told employees Thursday that the company’s U.S. operations will be set up in a new joint venture.
The entity is called TikTok USDS Joint Venture LLC, according to a memo sent by Chew and obtained by CNBC. As part of the joint venture, Chu said the company has signed agreements with three management investors: oracleMGX based in Silver Lake, Abu Dhabi. He said the “completion date” for the deal was Jan. 22.
Under a national security law upheld by the Supreme Court in January, China-based ByteDance must sell TikTok’s U.S. operations or face a de facto ban in the country. In September, President Donald Trump signed an executive order approving a proposed agreement that would allow TikTok to continue operating in the United States by meeting the requirements of a law originally signed by former President Joe Biden.
Chu said TikTok’s new joint venture will be “majority-owned by American investors, governed by a new seven-member board of directors that is majority American, and subject to conditions that protect American data and U.S. national security.”
The US joint venture will be 50% owned by a consortium of new investors, including 15% each from Oracle, Silver Lake and MGX. More than 30% will be held by affiliates of ByteDance’s existing investors, and 19.9% will be held by ByteDance, according to the memo.
TikTok’s chief said the company is responsible for protecting U.S. data and ensuring the safety of its valuable algorithms, content moderation and “software assurance.” He added that the joint venture “will have the exclusive right and authority to provide U.S. users with assurance that their content, software and data are secure.”
In addition to being an investor, Oracle will serve as a “trusted security partner” responsible for auditing and verifying compliance with “agreed national security provisions,” the memo said. Sensitive U.S. data will be stored in Oracle’s U.S.-based cloud computing data centers, Chu wrote.
The new TikTok entity will also be tasked with retraining the video app’s core content recommendation algorithms “based on U.S. user data to ensure content feeds are not manipulated from outsiders,” the memo said.
Chu said TikTok’s global U.S. entity will “manage global product interoperability and certain commercial activities such as e-commerce, advertising and marketing.”
Under President Trump’s September executive order, the attorney general was blocked from enforcing the national security law for 120 days to “authorize the completion of the planned sale,” allowing a deal to be finalized by January 23.
Spotlight: TikTok signs deal to sell U.S. division to joint venture
