ByteDance has closed a deal to form TikTok U.S., a joint venture that will be majority-owned by American investors — finally bringing the popular video app into compliance with a U.S. law that went into effect last year.
In the U.S., TikTok has more than 200 million individuals and 7.5 million businesses that use the app. The TikTok U.S. JV will “operate under defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation, and software assurances for U.S. users,” the company announced Thursday.
The new American company, formally called TikTok USDS Joint Venture, has three managing investors: Silver Lake, Oracle and Abu Dhabi’s state-owned investment firm MGX MGX, each holding 15%.
The rest of the consortium of investors are: Dell Family Office, the investment firm of Michael Dell, Founder, chairman and CEO of Dell Technologies; Vastmere Strategic Investments, an affiliate of Susquehanna International Group; Alpha Wave Partners; Revolution; Merritt Way, controlled and managed by partners of Dragoneer; Via Nova, an affiliate of General Atlantic; Virgo LI, investment arm of a foundation established by Yuri and Julia Milner in support of science; and NJJ Capital, the family office of Xavier Niel, a French entrepreneur and pioneer in telecommunications.
Beijing-based ByteDance retains 19.9% of the joint venture. With the deal, ByteDance and TikTok will come into compliance with the U.S.’s TikTok divest-or-ban law, which prohibits distribution in the U.S. of any app that is more than 20% owned by a “foreign adversary” (in this case, China).
TikTok U.S. will be led by Adam Presser, who was appointed as CEO by the JV’s board as one of its first actions. Presser, who is based in L.A., previously was head of operations and trust and safety for TikTok. Prior to joining TikTok in April 2022, Presser held roles at WarnerMedia, including EVP of WarnerMedia International and head of WarnerMedia China, Australia & New Zealand. Before that he worked at Warner Bros. Entertainment, most recently as SVP of international.
The JV’s management team also includes chief security officer Will Farrell, who before joining TikTok in 2020 held roles at consulting firm Booz Allen Hamilton.
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Members of the board of TikTok U.S. joint venture includes Shou Chew, who is CEO of TikTok.
The content algorithm used by the TikTok U.S. joint venture will be managed separately from the algorithm used in the rest of the world. The JV will “retrain, test and update the content recommendation algorithm on U.S. user data. The content recommendation algorithm will be secured in Oracle’s U.S. cloud environment.”
The U.S.-based version of TikTok will maintain global “interoperability,” ensuring that “U.S. creators can be discovered and businesses can operate on a global scale.” TikTok global’s U.S. entities will manage global product interoperability and certain commercial activities, including e-commerce, advertising and marketing.
The safeguards provided by the TikTok U.S. joint venture will also cover CapCut, and Lemon8, and a portfolio of other apps and websites in the U.S.
From Variety US