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A new US data security joint venture related to a popular short video platform, owned by a major Chinese tech company, will have the company as its largest single shareholder. This venture will handle the platform’s local operations and will retain full ownership of the platform’s algorithm and intellectual property. An internal memo sent to employees revealed that the company and TikTok have entered binding agreements with Oracle, Silver Lake, and MGX Fund Management to establish TikTok US Data Security. The Chinese company will hold a 19.9% stake, with the deal expected to close on January 22.
The company’s CEO emphasized that these agreements would allow over 170 million Americans to continue engaging with the platform. He stressed that the focus remains on serving users, creators, businesses, and the global community. The new investors—Oracle, Silver Lake, and MGX—will each hold a 15% stake, collectively owning half of the joint venture. The remaining 30.1% will be owned by affiliates of existing investors in the parent company. The majority of the venture will be owned and governed by US investors, with a seven-member board, most of whom will be US nationals.
This joint venture will be responsible for US data protection, content moderation, algorithm security, and software integrity—operations designed to meet national security standards. Its key responsibilities include safeguarding sensitive user data stored on a secure cloud environment in the US managed by Oracle, retraining the content recommendation algorithm to prevent outside interference, and overseeing the deployment and integrity of the local app platform. All content moderation policies within the country will require approval from the board, which has ultimate authority.
The parent company will continue to own the intellectual property rights to TikTok’s algorithm, licensing it to the joint venture and receiving licensing fees. Reasonable revenue-sharing arrangements will support the venture’s operational costs. Additionally, other TikTok divisions owned by the parent company in the US will manage global product interoperability and core revenue activities such as e-commerce, advertising, and marketing.
Experts compared this partnership to Apple’s “Cloud on Guizhou” model in China, though Apple does not hold a stake in that operation. The agreement was made under an executive order issued by the former US president in September, which states the new joint venture must be majority-owned by US investors and governed by a US-majority board, with protections in place for user data and national security.
Last year, the US House of Representatives passed legislation requiring social media apps owned by certain foreign companies to operate independently—limiting their parent companies to less than 20% ownership—to protect national interests.
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