TikTok Finalizes Deal to Create New US-Based Entity

In order to avoid the impending threat of a ban in the US, TikTok has finalised an agreement to establish a new American entity. To establish the new TikTok U.S. joint venture, the social video platform has inked deals with significant investors such as Oracle, Silver Lake, and the Emirati investment group MGX. The business said in a statement on 22 January that the new version will function under specified safeguards that protect national security through extensive data protections, algorithm security, content filtering, and software assurances for U.S. users. TikTok users in the United States can keep using the same app. Let’s explore the other details of the new entity.

Trump Praising the Deal

In a Truth Social post, President Donald Trump praised the agreement. In particular, he complimented Chinese leader Xi Jinping for cooperating with the United States and ultimately approving the deal. Trump went on to say that he believes those who use and enjoy TikTok will remember him for a very long time. Regarding TikTok's statement, the Chinese government has not yet made any public remarks.

China's stance on TikTok has been clear and constant, according to Liu Pengyu, the spokesperson for the Chinese embassy in Washington. Adam Presser, the former head of operations and trust and safety of TikTok, will serve as the CEO of the new business. He will collaborate with a board of directors consisting of seven members, the bulk of whom are Americans, including Shou Chew, the CEO of TikTok.

New TikTok Deal Ends US-China Deadlock

The agreement puts an end to years of speculation regarding the future of the well-known video-sharing website in the US. The platform was scheduled to go black on the law's January 2025 date after broad bipartisan majorities in Congress passed it. Joe Biden signed a bill that would prohibit TikTok in the United States if it did not find a new owner in place of China's ByteDance. It did for a few hours. However, President Donald Trump signed an executive order on his first day in office to keep it operating while his administration negotiated a deal to sell the business.

The joint venture will concentrate on TikTok's algorithm in addition to data protection, including local storage of U.S. user data in an Oracle-run system. According to the company's release, the content recommendation algorithm—which provides users with personalised films based on their likes and preferences—will be updated, tested, and retrained using user data from the United States.

The algorithm has been at the centre of the TikTok security controversy. China had previously insisted that the algorithm must continue to be governed by Chinese legislation. However, the two-party approved U.S. rule said that any divestiture of TikTok must result in the platform severing its connection with ByteDance, specifically its algorithm. As per the agreement, ByteDance would grant the U.S. entity a licence to retrain the algorithm.