ANALYSIS
TikTok USDS: The Oracle-Silver Lake deal that 'saved' TikTok
The new joint venture will host Americans' data in Oracle's cloud and has a majority-American board. ByteDance will take a 19.9% stake.
TikTok logo
TikTok announced the creation of a joint venture with an American majority to take over the platform in the United States. In this way, it aims to circumvent a law that banned the social network on U.S. soil if it remained in the hands of Chinese owners, due to national security risks.
Named TikTok USDS Joint Venture LLC, the partnership will serve more than 200 million users and 7.5 million businesses, according to the platform, which also pledged to comply with "defined safeguards that protect national security." Under its umbrella will also be the platforms CapCut and Lemon8.
"The TikTok USDS joint venture has three managing investors, Silver Lake, Oracle and MGX, each with a 15% stake," explained TikTok in a statement. Investors also include companies such as Michael Dell's Dell Family Office and French entrepreneur Xavier Niel's NJJ Capital. ByteDance will hold a 19.9% stake of the shares.
Key facts about the deal for TikTok
- Price of the deal: The amount of the transaction is unknown. Last year, U.S. Vice President J.D. Vance valued TikTok USA at $14 billion, according to AFP, a figure that several experts consider below its real level, according to the same agency.
- Data storage: American users' data will be stored in Oracle's cloud. "The content recommendation algorithm will be secured in Oracle's U.S. cloud environment," specified TikTok, which defined the latter as "its Trusted Security Partner."
- Majority American board: The company will be governed by a seven-member board. Six are Americans. The remaining one is Singaporean Shou Chew, CEO of TikTok.
From ban to sale: TikTok's arduous path
The new structure responds to a law passed with bipartisan backing and signed by Joe Biden. The rule forced TikTok's Chinese parent company ByteDance to sell the platform or face a ban in the U.S.
The platform launched a campaign against the law, both to the public, with creators and even a temporary blackout in the U.S., and before the courts. The latter climbed all the judicial rungs until it reached the Supreme Court, which early last year endorsed the ban.
TikTok's salvation came by another route: on the same day of his second presidential inauguration, Donald Trump proposed a plan to "save TikTok." It consisted of forming a joint venture with half American ownership. The president then had to extend the ultimatum several times for ByteDance to reach an agreement.
The platform assured that the new joint venture was created "in compliance" with Trump's demands. The 19.9% stake that ByteDance will retain is below the 20% allowed by law.
Trump: 'I am so happy to have helped in saving TikTok!'
The president took to his own social network, TruthSocial, to celebrate the announcement: "I am so happy to have helped in saving TikTok! 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."
"Along with other factors, it was responsible for my doing so well with the Youth Vote in the 2024 Presidential Election. I only hope that long into the future I will be remembered by those who use and love TikTok," he added before thanking Vice President J.D. Vance and Chinese President Xi Jinping for their participation.
Trump assured that Xi had collaborated in the formulation of the agreement and had given it his final approval. "He could have gone the other way, but didn’t, and is appreciated for his decision," he wrote.
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