TikTok signs agreement to create new U.S. joint venture, memo says

TikTok’s US operations will be involved in a new joint venture, according to a memo sent to employees by CEO Shou Zi Chew.

In the note, it was stated that the name of the organization was TikTok USDS Joint Venture LLC.

As part of the joint venture, Chew said in a note obtained by CNBC that the company signed agreements with three executive investors: SeerMGX based in Silver Lake and Abu Dhabi. Chew said the “closing date” for the deal is January 22.

Under a national security law the Supreme Court upheld in January, China-based ByteDance was required to divest TikTok’s U.S. operations or face an effective ban in the country. In September, President Donald Trump signed an executive order approving a proposed deal that would keep TikTok operational in the United States by meeting the requirements of a law signed by former President Joe Biden.

Chew noted that the new TikTok joint venture will be “majority-owned by American investors, governed by a new seven-member board of directors composed mostly of Americans, and subject to terms that protect Americans’ data and U.S. national security.”

50% of the US joint venture will be held by a consortium of new investors including Oracle, Silver Lake and MGX; each will own 15% shares; 30.1% is held by affiliates of some of ByteDance’s existing investors; The note stated that 19.9% ​​would be retained by ByteDance.

The TikTok chief said the new joint venture will be responsible for protecting US data, ensuring the security of its valuable algorithm, content moderation and “software assurance.” He added that the joint venture will also “have the exclusive right and authority to provide assurance that content, software and data for American users is secure.”

In addition to being an investor, Oracle will be the new organization’s “trusted security partner” responsible for auditing and verifying its compliance with “agreed National Security Requirements,” the statement said.

Sensitive US data will be stored in Oracle’s US-based cloud computing data centers, Chew wrote.

The new TikTok entity will also be tasked with retraining the video app’s core content recommendation algorithm “on U.S. user data to ensure the content stream is free from outside manipulation,” the memo said.

TikTok global’s U.S. entities “will manage global product interoperability and certain business activities, including e-commerce, advertising and marketing,” Chew said.

Under Trump’s administration executive order Approving the deal in September, the attorney general was blocked from enforcing the national security law for a period of 120 days to “allow the completion of the contemplated divestiture,” allowing the deal to close by January 23.

In early September, Trump signed a separate executive order extending TikTok’s deadline for the fourth time and giving ByteDance until Dec. 16 to sell its TikTok business in the United States.

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