ByteDance reduces its ownership stake to 20 percent to meet U.S. legal requirements, entrusting investment groups such as Oracle and Silver Lake with comprehensive data security oversight covering affiliated apps like CapCut and Lemon8.
TikTok announced the completion of its U.S. business separation deal, officially forming a joint venture last Thursday local U.S. time. This move responds to the 2024 legal mandate requiring companies to either sell their operations or face a ban due to national security concerns. The new structure enables TikTok to continue operating in the U.S. under stricter oversight. The joint venture's security measures will extend to other affiliated apps like CapCut and Lemon8, as well as all related U.S. websites, aiming to reassure the government and regulatory agencies.
Under the new shareholding agreement, ByteDance, TikTok's parent company, will reduce its stake to approximately 20 percent to comply with divestment rules mandated by law. Major investors Oracle, Silver Lake, and Abu Dhabi-based MGX will each acquire a 15 percent stake.
The remaining roughly 30 percent of shares will be held by ByteDance's existing investors. Additionally, other co-investors such as Michael Dell's family and partners from the Dragoneer investment group will join the new ownership structure. This arrangement means ByteDance will no longer hold majority voting rights within the new U.S. legal entity.
In terms of management and governance, Adam Presser, who has worked with TikTok for nearly four years in operations and security, will become the head of the new joint venture. The board of directors will consist of seven members, with an American majority including TikTok CEO Shou Zi Chew.
Regarding technical operations, key investors Oracle, MGX, and Silver Lake will primarily focus on data security management. Meanwhile, e-commerce, advertising, and marketing systems will continue to be supported by ByteDance, reflecting pre-arranged functional divisions.
This agreement marks the end of TikTok's prolonged uncertainty with the U.S. government and enables its U.S. employees to work with greater confidence. The company began separating legal entities earlier this year to comply with legal requirements. Although future challenges remain in managing the distinct security and commercial teams, this deal is a crucial step allowing TikTok to maintain its user base and business ecosystem in the U.S. market.
. Source:Business Insider