TikTok has finalized a deal with a new U.S. owner that includes Oracle, MGXand silver lake. However, these investors will not have significant control over key areas of the business, according to an internal memo.
what happened: TikTok has cooperated with OracleAbu Dhabi Investment Company MGXand private equity firms silver lake to obtain a joint venture agreement. These new investors will focus on tasks related to national security, such as data management and algorithm training.
However, the current owner of TikTok, ByteDancewill retain control of key business lines, including e-commerce and advertising.
TikTok CEO longevity week It has said the new investors will not control core business lines such as TikTok Shop or ad sales, but may still participate in the business’s profits.
“The U.S. joint venture, built on the current TikTok U.S. Data Security (USDS) organization, will operate as an independent entity with U.S. data protection, algorithm security, content moderation and software assurance authority, while TikTok Global’s U.S. entity will manage global product interoperability and certain commercial activities, including e-commerce, advertising and marketing,” Business Insider Chew wrote in the memo.
Also read: One in five Americans gets news from TikTok — up from just 3% in 2020
The deal, expected to close in late January, will see Oracle, Silver Lake and MGX collectively hold a 45% stake in the U.S. joint venture.
ByteDance will retain ownership of just under 20% of the U.S. business but retain oversight of the rest of the world and manage TikTok US’s e-commerce, advertising and marketing strategies.
why it’s important: The deal marks a major shift in the ownership structure of TikTok’s U.S. business. Although the new investors will hold significant stakes in the company, their control over key business areas will be limited.
This arrangement ensures that original owner ByteDance retains control of key business lines and thus maintains influence over the company’s strategic direction. The new investors’ focus on national security-related missions aligns with the U.S. government’s concerns about the platform’s data privacy and security.
The deal could pave the way for similar arrangements at other technology companies focused on national security concerns.
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