Video and photo-sharing platform TikTok has created a new joint venture, TikTok USDS Joint Venture LLC, with majority American ownership to continue operating its business in the United States and avoid a potential ban linked to its Chinese roots.
The new entity is expected to serve more than 200 million users and 7.5 million businesses across the country, with enhanced safeguards for data protection, algorithm security, and content moderation.
Backed by mostly US investors, the newly established TikTok USDS Joint Venture LLC is governed by a board of seven directors.
TikTok chief executive Shou Zi Chew is among them, and its Chinese owner ByteDance will retain a 19.9% stake in the business.
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Former US President Donald Trump welcomed the agreement and claimed credit for facilitating the deal, while also expressing appreciation to Chinese President Xi Jinping for approving the arrangement.
“I am so happy to have helped in saving TikTok!” Trump said in a post on Truth Social late Thursday.
“It will now be owned by a group of Great American Patriots and Investors, the Biggest in the World, and will be an important Voice.
“I would also like to thank President Xi of China for working with us and, ultimately, approving the Deal,” he added.
The joint venture is owned by a group of American investors, including Silver Lake, Oracle, and Abu Dhabi-based AI investment fund MGX, each holding 15% stakes, while ByteDance retains a 19.9% stake.
The content recommendation algorithm at the heart of TikTok – determining which videos show up on the app’s For You feed – has been licensed to tech firm Oracle
Headed by Trump ally Larry Ellison, Oracle already oversees TikTok US user data under a previous arrangement set up over security concerns called Project Texas.
But the company will now secure more of the app, including by retraining and updating its recommendation algorithm based on US user data.
TikTok says both the algorithm and US user data will be protected in “Oracle’s secure US cloud environment”.
TikTok updated its terms of service for US users as the deal closed on Thursday.
It says the contract users agree to is now between themselves and the platform’s new US entity, TikTok USDS Joint Venture.
There are several changes. One new rule says children under the age of 13 cannot use TikTok outside of its specific “Under 13 Experience”.
Another point says the new US entity “does not endorse any content” on the platform, nor does it reflect its views.
US users who continue to use TikTok from 22 January also must agree to the limitations of generative AI – such as its potential to generate inaccurate, misleading, inappropriate or unlawful content.
“By using the platform, including its generative AI-enabled features, you recognise and assume this risk,” it says.