Well, TikTok, have we got some good news! Related agreements with Encina Investor Partners, Oracle, Silver Lake, and MGX pave the way for a new joint venture in the United States. This strategic move aims to ensure TikTok’s continued operation within the country amid ongoing scrutiny over data security and national interests. As of now, the deal is scheduled to close on January 22, 2024. This step is an important first step to addressing growing regulatory issues related to the platform.
A seven-member board of directors will oversee the new U.S. venture. All citizens of the United States, native-born or naturalized. This governance structure is intended to improve content moderation and policy oversight particularly focused on U.S. users. By re-localizing operational control, TikTok aims to reinforce the assertion that it is doing all it can to protect U.S. user data privacy.
In a novel change, we plan to now keep user data in-country. Oracle will provide the new system, which will create stronger data protection safeguards. As for that new joint venture, it features a fascinating ownership and governance structure. Oracle, Silver Lake, and MGX each hold 15% stakes, and ByteDance—the Chinese parent company—would keep a 19.9% stake. An additional 30.1% will go to branches of current investors in ByteDance.
This restructuring comes in response to bipartisan U.S. regulations that mandate divestment from TikTok must sever ties with ByteDance, particularly regarding the platform’s algorithm. Yet, fears are mounting that new data could be manipulated by Chinese officials. The Chinese government has privately demanded that control over the algorithm remain within its borders.
Shou Zi Chew, TikTok’s CEO, emphasized the importance of this transition:
“I want to take this opportunity to thank you for your continued dedication and tireless work. Your efforts keep us operating at the highest level and will ensure that TikTok continues to grow and thrive in the U.S. and around the world.”
Chew further stated that with these agreements finalized, TikTok’s focus must remain on serving its diverse community:
“With these agreements in place, our focus must stay where it’s always been—firmly on delivering for our users, creators, businesses and the global TikTok community.”
The new agreement stipulates terms designed to “ensure the content feed is free from outside manipulation,” addressing fears about foreign interference. As TikTok transitions to this new structure, it aims to reassure users and stakeholders of its commitment to maintaining a secure and trustworthy platform.
Oracle, widely recognized for its cloud prowess and data security expertise, is now working to help user information stay secure. Their engagement has all the potential to be a game-changer in this endeavor. The collaboration between these investors signals a collective effort to enhance the platform’s standing in a market increasingly concerned with cybersecurity.
