TikTok Finalizes Deal with Oracle and Investors to Continue US Operations
TikTok, the popular social video platform, has finalized a deal with Oracle and two other investors that will allow it to continue its business in the US. The deal, expected to close on January 22, will be 50% held by a new investor consortium that includes tech giant Oracle, Silver Lake, and MGX, a technology fund in the United Arab Emirates, with each holding 15%. The rest of the group will be made up of ByteDance owning 19.19% and affiliates of existing ByteDance investors holding 30.1%, according to a memo to employees.
“With these agreements in place, our focus must stay where it’s always been — firmly on delivering for our users, creators, businesses, and the global TikTok community,” TikTok CEO Shou Zi Chew wrote in his memo. The company’s future in the US had been uncertain for many years, amid security concerns among legislators about ByteDance’s ties to China. TikTok’s parent company, ByteDance, had been under pressure to divest its ownership in the app’s US operations or face a nationwide ban, due to a law Congress passed that went into effect in January.
Deal Details and Implications
The venture, which would oversee US data protection, algorithm security, content moderation, and software assurance, would be governed by a seven-member board that is majority American, Chew said in his memo. Oracle will be the security partner responsible for “auditing and validating compliance with the agreed-upon National Security Terms,” Chew wrote. The deal is expected to remove a persistent issue in Beijing-Washington relations and signal progress in broader talks. However, it would also deprive China’s most valuable private company of total control of an American social media phenomenon.
ByteDance’s coveted algorithms are considered central to TikTok’s business. Under the deal proposed by Washington, ByteDance will license its AI recommendation technology to a newly created US TikTok entity, which will use the existing algorithm to retrain a new system that is secured by Oracle, according to Bloomberg. The algorithm will be retrained on US user data by the US joint venture, according to TikTok. Some industry observers questioned whether the deal addresses the larger concerns surrounding TikTok in the law Congress passed.
Reactions from Creators and Experts
“I hope it just stays true to the platform and the independence we get from it,” said Yasmine Sahide, a TikTok creator with 2.4 million followers. “I hope we’re still able to monetize our videos the same way because without that, I think a lot of people would leave or feel uninspired.” Keith Lee, a TikTok creator with 17.3 million followers, expects the algorithm to change. “I just hope that we can still stay connected with our community and reach an audience the same way as before,” he said.
Ray Wang, principal analyst at Constellation Research, said the deal is a smart way to avoid ownership and data issues. However, Jennifer Huddleston, senior fellow in tech policy at the Cato Institute, questioned whether the deal addresses the underlying concerns about the law, which could be applied to other platforms in the future and raise questions about executive power. For more information, read the full article Here.
Image Source: www.latimes.com
