TikTok has finalized a deal to divest shares in its US operations in compliance with a foreign aid bill signed by President Biden in 2024. It includes the launch of a new company called TikTok USDS Joint Venture LLC, ByteDance announced Thursday.
The joint venture has three non-Chinese managing investors, each with a 15% stake: Oracle, Silver Lake, and MGX, a state-owned AI investment firm based in Abu Dhabi.
As part of the deal, TikTok USDS will store US user data and the content recommendation algorithm for US users in Oracle’s cloud environment. The venture also has the right to “retrain, test, and update the content recommendation algorithm on US user data.”
To protect that data, TikTok USDS will follow comprehensive data privacy and cybersecurity practices, audited and certified by third-party experts. The company’s data protection and content-moderation policies will also apply to TikTok’s video editor CapCut, Lemon8, and a portfolio of other apps, according to a press release.
We first got wind of these changes last month, when an internal memo from TikTok CEO Shou Chew was leaked. Most of the terms mentioned in the memo made it into the final draft. In July, there were reports that people might have to download a new TikTok app should a deal be approved, but there was no mention of that in this week’s deal.
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This deal puts an end to the ownership drama that began during President Trump’s first term. In 2020, he signed an executive order requiring TikTok to divest from its Chinese owners or face a ban in the US, citing national security concerns. TikTok sued, and the issue was not resolved before Trump lost re-election and Biden took office.
Biden then rescinded Trump’s executive order but told his administration to prepare recommendations to prevent a foreign adversary, such as China, from seizing consumer data from apps like TikTok or WeChat. In mid-2024, he signed the foreign aid bill, which included a section on TikTok with terms similar to those in Trump’s EO. It gave TikTok a “divest or get banned” deadline of Jan. 19, 2025—one day before the next president’s inauguration.
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TikTok took the fight all the way to the Supreme Court, but lost at the eleventh hour. That led to tearful goodbyes from popular TikTok creators as Jan. 19 approached. The app even went dark for a few hours as TikTok tried to get the White House to intervene. When Trump returned to the White House, he extended the deadline several times, even though the law only allowed him to delay the ban for 90 days if a divestiture deal was imminent.
In the end, it took over a year to get something done, suggesting the national security concerns weren’t all that pressing.
After the deal was announced this week, Trump took credit for making it happen. “I am so happy to have helped in saving TikTok!” he wrote on Truth Social. “Along with other factors, it was responsible for my doing so well with the Youth Vote in the 2024 Presidential Election. I only hope that long into the future I will be remembered by those who use and love TikTok.”
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Jibin is a tech news writer based out of Ahmedabad, India. Previously, he served as the editor of iGeeksBlog and is a self-proclaimed tech enthusiast who loves breaking down complex information for a broader audience.
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