The parent company of the video platform TikTok, China’s ByteDance, has signed a contract with U.S. companies including Oracle to establish a joint venture in the United States, according to reports by Bloomberg and Reuters.
According to the reports, TikTok CEO Shou Zi Chew stated in a memo to company employees on the 18th, local time, that ByteDance has signed a binding agreement with Oracle, Silver Lake, and MGX.
Silver Lake is a U.S. private equity firm primarily investing in tech companies, while MGX is an investment company founded last year by the Abu Dhabi sovereign wealth fund and the UAE tech firm G42.
CEO Chew explained that the transaction is expected to be completed on January 22 next year, and that the U.S. joint venture will operate as an independent entity with authority over data protection, algorithm security, content management, and software assurance in the U.S.
He added that TikTok Global’s U.S. entities will be responsible for commercial activities including interoperability of global products, e-commerce, advertising, and marketing.
According to the memo, the three companies, Oracle, Silver Lake, and MGX, will each acquire a 15% stake, totaling 45% in the joint venture, while ByteDance is expected to hold a 19.9% share.
Bloomberg reported that the remaining 30.1% stake will be held by affiliates of ByteDance’s particular investors.
Reuters explained that under this agreement, ByteDance will sell more than 80% of its U.S. assets to U.S. and global investors.
TikTok has gained immense popularity in the U.S., with approximately 170 million users, but there have been concerns that personal data could be transferred to China or used in hacking.
In response, the U.S. Congress passed the “TikTok Ban Bill” in April last year during Joe Biden’s administration, citing personal information protection, putting ByteDance in a position where TikTok service in the U.S. would be halted unless it sold its U.S. business rights to an American company.
The TikTok issue is also a key topic in U.S.-China trade negotiations.
U.S. President Donald Trump stated in September that an agreement had been reached with China regarding TikTok’s U.S. business rights.
The original deadline for the sale was January 19 this year, but President Trump has extended the deadline multiple times.
The core appeal of TikTok is its high-performance AI algorithm that analyzes users’ interests to accurately recommend videos. ByteDance is reportedly providing the U.S. joint venture with a license for this AI algorithm technology.
The new joint venture is expected to use Oracle’s computing infrastructure and train a new AI system using the licensed algorithm, Bloomberg reported.