TikTok said that it has reached an agreement to establish a new joint venture company in the US to avoid the risk of being banned from operating. Accordingly, the Chinese owner of TikTok, ByteDance, has completed an agreement to establish a joint venture legal entity controlled by the US.
The new company named TikTok USDS Joint Venture LLC, will be responsible for protecting TikTok's user data, applications and algorithms in the US through data privacy and network security measures. TikTok affirms that this mechanism aims to address long-standing concerns related to national security.
According to the agreement, US and international investors will hold 80.1% of the joint venture's shares. This group includes Oracle cloud computing group, Silver Lake private investment fund and MGX headquartered in Abu Dhabi. ByteDance will hold the remaining 19.9% of shares.
This is considered an important milestone for TikTok after years of facing legal pressure in the US. The controversy began in 2020, when US President Donald Trump first sought to ban this application on security concerns. Efforts at that time were unsuccessful, but TikTok still continuously faced the risk of being restricted or completely banned.
TikTok is currently used by more than 200 million people in the US. The formation of a US-controlled joint venture is considered a key solution for this application to continue to exist in its most important market, while creating a new ownership structure to reduce tensions between stakeholders.
