The TikTok deal is done and Donald Trump is claiming a victory, although it remains unclear whether the joint venture he struck with ByteDance and the Chinese government will actually solve Congress's national security concerns.
In a press release Thursday, TikTok announced the “TikTok USDS Joint Venture LLC,” an entity created to keep TikTok active in the US.
By giving the Americans the majority stake, ByteDance retains 19.9 percent of the joint venture, which is valued at $14 billion. Three managing investors – Silver Lake, Oracle and MGX – each own 15 percent, while other investors, including Dell Technologies CEO Michael Dell's investment company, Dell Family Office, have smaller, undisclosed stakes.
Americans will also have majority control over the joint venture's seven-member board. TikTok CEO Shou Chew has the sole seat of ByteDance. Completing the deal was a “great move,” Chew told TikTok employees in an internal memo, The New York Times reported.
Two former TikTok employees will lead the joint venture. Adam Presser, who previously served as TikTok's Global Head of Operations and Trust & Safety, has been named CEO. And Kim Farrell, TikTok's former global head of Business Operations Protection, will serve as Chief Security Officer.
Trump has claimed that the deal meets the requirements for “qualified divestiture” to avoid a TikTok ban otherwise required under the Protecting Americans from Foreign Adversary Controlled Applications Act. However, questions remain because lawmakers have not yet analyzed the terms of the deal to determine if that is true.
The law requires the divestiture to “terminate any 'operating relationship' between ByteDance and TikTok in the United States,” critics told the NYT. That could be a problem, as TikTok's release makes it clear that ByteDance will retain some control over the operations of the US TikTok app.
For example, while the US owners will retrain the algorithm and manage data security, ByteDance owns the algorithm and “will manage global product interoperability and certain commercial activities, including e-commerce, advertising and marketing.” The Trump administration has apparently agreed to these terms to ensure that American TikTok is not cut off from the rest of the world through the app.
