TikTok inks joint venture deal for US operations

In a bid to avert a potential US ban over so-called security concerns, popular social media platform TikTok announced on Friday that it had closed a deal to establish a majority United States-owned joint venture to run its US operations.

Under the agreement, US and global investors — including cloud computing giant Oracle, US private equity firm Silver Lake and Abu Dhabi, United Arab Emirates-based investment company MGX — will collectively hold 80.1 percent stake in the new entity.

TikTok's parent company ByteDance will retain the remaining 19.9 percent, keeping its ownership below the 20 percent threshold stipulated by US law.

As part of the arrangement, the JV will assume responsibility for safeguarding both US user data and TikTok's content recommendation algorithm.

According to the statement, US user data and content recommendation algorithm will both be secured in Oracle's US cloud environment, where the new JV will retrain, test and update the algorithms and run audited, third-party-certified data privacy and cybersecurity programs aligned with US regulations.

The deal marks a major milestone for the short-video app after years of regulatory and legal battles dating back to August 2020, when Washington first sought to ban TikTok over what it claimed were national security concerns.

Against this backdrop, Chinese authorities have repeatedly emphasized the importance of a balanced and lawful resolution.

At a news conference in Beijing in late December, a spokesperson for the Ministry of Commerce said the Chinese government hopes that relevant parties can reach a resolution regarding Tik-Tok that complies with Chinese laws and regulations and achieves a balance of interests, urging the US to provide a fair, open, transparent and nondiscriminatory business environment for the continuous and stable operation of Chinese enterprises.

"A viable path has ultimately been found by joint efforts to achieve data and algorithm compliance," said Pan Helin, a member of the Expert Committee for Information and Communication Economy, which is part of the Ministry of Industry and Information Technology. While TikTok's enhanced compliance framework in the US will allow its operations to continue and help stabilize its business model, the move is also expected to support the building of long-term trust with local users, laying the groundwork for future ecosystem expansion, Pan said.

As a BBC report also noted, "it made sense for Washington to strike a deal rather than ban TikTok", given the app's popularity among some 200 million American users.

However, Pan cautioned that challenges still remain. "On one hand, stringent compliance oversight could add operational pressure. On the other, regulatory constraints may slow the pace of TikTok's algorithm iteration, forcing innovation to give way to compliance," he added.

According to the statement, the JV will be led by Chief Executive Officer Adam Presser, who previously headed TikTok's US user data-related work, and Chief Security Officer Will Farrell, who oversaw privacy and security initiatives related to the project.

It will also be overseen by a majority-American board of directors that includes TikTok CEO Shou Zi Chew, who will continue running ByteDance's global business.

lijiaying@chinadaily.com.cn