ByteDance Signs Deal For TikTok's New US JV To Avoid Ban

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(RTTNews) - With a view to avoiding a U.S. government ban for TikTok, its Chinese owner ByteDance Ltd. signed binding agreements, backed by President Donald Trump, with three managing investors to form a joint venture to operate the U.S. operations of the video-sharing app, media reported citing a memo.

With the deal, the social video platform, which is used regularly by more than 170 million Americans, could continue operating in the United States after years of uncertainity.

Chief Executive Officer Shou Zi Chew, in the memo to employees, noted that the investors including Oracle Corp., Silver Lake and Abu Dhabi-based investment firm MGX will own a major stake in the JV.

Following the news, Oracle shares gained around 5.4% in the after hours trading, to reach $189.68.

Under the deal, ByteDance will retain 19.9% of the new U.S. joint venture named TikTok USDS Joint Venture LLC, while Oracle, Silver Lake and MGX will hold 15% each. According to the memo, the remaining 30.1% will be held by affiliates of existing ByteDance investors.

The deal is set to close on January 22, ending efforts by Trump to force ByteDance for the sale of its US operations citing national security concerns.

The joint venture is said to operate as an independent entity with authority over U.S. data protection, algorithm security, content moderation and software assurance.

Zi Chew said, "We have signed agreements with investors regarding a new TikTok U.S. joint venture, enabling over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community."

As per the reports, the deal terms are in line with executive order signed in September by Trump, approving a proposed deal that would keep TikTok operational in the U.S.

The CEO also declared that the deal met the divestiture requirements terms required by a 2024 law.

Chew added that the new TikTok joint venture would be majority owned by American investors, governed by a new seven-member majority-American board of directors, and subject to terms that protect Americans' data and U.S. national security.

Along with being an investor, Oracle will serve as the trusted security partner, and sensitive U.S. data will be stored in Oracle's U.S.-based cloud computing data centers.

The White House previously said that Oracle will license TikTok's recommendation algorithm as part of the deal.

In April 2024, the US Congress during President Joe Biden's administration had passed a law to ban the app on national security grounds, unless it was sold. TikTok was to be banned in the U.S. starting January 20, 2025 unless ByteDance sells it to a non-Chinese buyer or one of its allies.

Meanwhile, Trump pushed back the decision many times as the administration worked out a deal to transfer its ownership.