After years of back-and-forth and with the Trump administration's ban deadline fast approaching,The fate of TikTokThe dust has finally settled. TikTok announced earlier...Complete the spin-off of the US businessFurthermore, a new joint venture, "TikTok USDS Joint Venture LLC," was established. Through this restructuring, TikTok will become a company dominated by US investors, thereby alleviating national security concerns and avoiding a ban.
ByteDance's stake will be significantly reduced to 19.9%, but it will retain ownership of the crucial algorithm, which it will only license to the new company.
Major Shareholding Reshuffle: US Capital Dominates, Oracle and Silver Lake Each Take 15%
According to the latest agreement structure, the newly established TikTok US Data Security Co., Ltd. will be 80.1% owned by non-Chinese investors, while ByteDance will be second, holding the remaining 19.9%, but will still be the largest single shareholder.
The main US investors are a prestigious lineup, including:
• Oracle:Holding 15% of the shares.
• Silver Lake:Holding 15% of the shares.
• MGX:Holding 15% of the shares.
• Dell Family Office:Holding 5% of the shares.
The remaining 30.1% belongs to TikTok's existing global shareholders.
The new company will be overseen by a seven-member board of directors, including current TikTok CEO Shou Zi Chew and representatives from investors. The management team will consist of Adam Presser, former Executive Vice President of WarnerMedia International and former Head of Operations and Trust Security at TikTok, as CEO, and Will Farrell as Chief Security Officer, responsible for overseeing the most sensitive data security aspects.
Algorithms are "rented but not sold," and data is retrained locally.
The core point of contention in this deal, the "algorithm," was ultimately resolved with a compromise. ByteDance will retain the intellectual property rights (IP) to the TikTok algorithm and will license it to TikTok US Data Security Co., Ltd.
This means that the core code has not been "exported" or sold (which complies with the Chinese government's bottom line on technology export controls), but TikTok's US data security company will retrain the content recommendation model using US user data through Oracle's cloud environment.
The scope of authority of TikTok's US data security company will be fully taken over:
• US user data protection.
• Algorithm security and compliance.
• Content moderation (Trust & Safety).
The management scope covers TikTok and ByteDance's other products such as CapCut and Lemon8. The original TikTok entity will be responsible for e-commerce, advertising sales, and marketing operations, ensuring monetization and interconnectivity of global products.
User experience unchanged, 2 million American users breathe a sigh of relief
For ordinary users and creators, this change will be largely "unnoticed." TikTok emphasizes that its 2 million users in the United States will still be able to see content from around the world, and its 750 million businesses will continue to operate. The platform will maintain its global community operating model and will not become an isolated American version of Douyin.
Analysis of viewpoints
This survival game, codenamed "Unbanned," eventually paved the way for "Project Texas 2.0."
ByteDance's original "Project Texas" focused on localizing data and Oracle's oversight, but at the time, the US believed that maintaining the original shareholding structure was risky. The current plan, while still retaining nearly 20% ownership, dilutes its stake by bringing in numerous US institutions (Oracle, Silver Lake) and relinquishes key projects like "content moderation" and "data security," thus giving the US government a sufficient reason to back down.
The most ingenious maneuver lies in the algorithm handling: ByteDance retains its algorithm IP (which gets Beijing's approval), while the US gains oversight of the algorithm's operating logic and the right to train it locally (which puts Washington at ease).
This model of "exchanging equity for governance and authorization for survival" may become a new paradigm for multinational tech giants to survive in the geopolitical cracks. However, after the establishment of TikTok's US data security company, how to strike a balance between "profit pressure from US shareholders" and "strict compliance costs" will be the next challenge.
But at least for now, young Americans don't have to worry about not being able to find the next short video.
