It’s been made official. TikTok is on its way to being held firmly in the hands of American investors. Today the US President and former Home Alone 2 actor Donald Trump signed an executive order that outlined the terms of a deal to transfer TikTok to US ownership.
The signing follows an agreement reached with China’s President Xi Jinping, allowing TikTok to continue to operate in the US, distinct from its Chinese owner ByteDance.
US investors will now take over the majority of TikTok’s operations, licensing a copy of its secret sauce content recommendation algorithm from ByteDance. ByteDance and Chinese investors will own less than 20% of the new version. The remaining 80% will be owned by American investors.
It is understood that if the new US owners want to make any changes to the algorithm, it would still need to be signed off on by China.
Vice President JD Vance stated that the the business is valued at $14 billion. Previous estimates placed a US-controlled TikTok at between $30 billion to $35 billion.
The investors
A seven-member board of directors will oversee the new company, with the board comprising of cybersecurity and national security experts. Six of them will be Americans.
US software company Oracle will provide cloud service for data storage and will have a license to control the app’s algorithm. Oracle owner Larry Ellison will take an ownership stake in the new company, alongside investors including Rupert Murdoch and Dell Computers CEO Michael Dell.
Vance has said that more information on the new US ownership would be revealed soon. The US government will not take any ownership stake in it.
CNBC reporter David Faber reported that ByteDance investors including General Atlantic, Susquehanna and Sequoia, are expected to contribute equity into the US TikTok business. He also cited an investment stake held by by Silver Lake and the Abu Dhabi-based MGX investment fund. Neither business was confirmed to be involved at today’s event.
“Great investors. The biggest. They don’t get bigger,” Trump said.
Trump has told reporters that the new platform will be politically agnostic and not aligned with MAGA-friendly ideals.
“I always like Maga-related. If I could, I’d make it 100% Maga-related,” Trump said before adding that “Every group will be treated fairly.”
“What this deal ensures, is that the American entity and American investors will actually control the algorithm. We don’t want this used as a propaganda tool by any foreign government. We want to make sure that our people and our investors actually make these decisions based on what’s good for their business, as opposed to what’s good for another government’s propaganda arm,” Vance told the media.
Questions remain
While Trump has signed his executive order, there is no detail on how the US TikTok deal will impact TikTok users outside of the US. Will the current ByteDance ownership continue internationally in all territories except the US, or will the US licensing of TikTok be viewed as a product for other western territories?
How much China has bought into the new deal is also questionable. No representatives from ByteDance were in attendance at the signing and the company hasn’t acknowledged the deal. The Chinese government would also need to change laws to enable the deal to go through, which also hasn’t happened yet.