TikTok Creates New U.S. Entity to Avoid Ban

TikTok has officially established a new American branch, which helps sidestep the potential ban that has been a topic of discussion regarding the app used by over 200 million Americans.

The video platform has inked agreements with significant investors like Oracle, Silver Lake, and the Emirati firm MGX to create a U.S. joint venture. This new version of TikTok will operate under specific safeguards aimed at ensuring national security, including robust data protection, algorithm security, and content moderation measures for its American users. Users in the U.S. can still access the same app they’ve come to know.

President Donald Trump expressed support for the arrangement in a post on Truth Social, even thanking Chinese leader Xi Jinping “for working with us and, ultimately, approving the Deal.” He added that he hopes to be remembered positively by TikTok users in the future.

The new entity will be headed by Adam Presser, previously TikTok’s head of operations and trust and safety. He will lead alongside a seven-member American board of directors, which will also include TikTok’s CEO, Shou Chew.

This deal concludes years of speculation about TikTok’s future in the U.S. A bipartisan agreement in Congress, endorsed by President Joe Biden, had set a deadline for TikTok to find a new owner outside of China’s ByteDance, or face a ban. The platform was on the verge of going dark just before the January 2025 deadline, but Trump signed an executive order on his first day in office to keep it operational as negotiations for the sale progressed.

A spokesperson from China’s Foreign Ministry, Guo Jiakun, responded to the deal and Trump’s comments, reinforcing that China’s stance on TikTok has been consistent.

The new venture will not only focus on data security, with U.S. user data being kept local under Oracle’s management, but will also revamp TikTok’s algorithm. According to the company, the recommendation system, which customizes video feeds for users, will be adjusted based on U.S. user data.

The algorithm has been a focal point of security discussions regarding TikTok, previously restricted by Chinese laws. However, U.S. regulations mandated that any sale of TikTok would necessitate severing ties with ByteDance, particularly concerning the algorithm. In this arrangement, ByteDance will license the algorithm to the U.S. venture for retraining.

Legislation prohibits any collaboration regarding the operation of the content recommendation algorithm between ByteDance and the new American ownership group, creating uncertainty about how ByteDance’s role will evolve in this context.

Anupam Chander, a law and technology professor at Georgetown University, noted that who controls TikTok in the U.S. will significantly influence what content Americans see on the platform.

Oracle, Silver Lake, and MGX are the three key investors, each holding a 15% stake in the joint venture. Other participants include Michael Dell’s investment firm, with ByteDance maintaining a 19.9% share in the new setup.