Donald Trump yesterday signed an executive order titled ‘Saving TikTok while protecting national security’, formally approving a plan to sell TikTok US to a new joint venture business controlled by American investors.
The order states that the plan complies with the law passed by Congress last year which said that current owner, China-based ByteDance, must sell the app to avoid it being banned in the country. That law was designed to allay concerns that the Chinese government had access to TikTok user-data via ByteDance.
The “proposed divestiture” that has been months in the making, will “allow the millions of Americans who enjoy TikTok every day to continue using it while also protecting national security”, according to Trump’s executive order.
It then sets out some basic information about the planned sale, though mainly information that had already been revealed through different statements and interviews over recent weeks.
American investors will own at least 80% of the new TikTok US business, which will in turn “control the operation” of the TikTok algorithm within the US, as well as making “content-moderation decisions” and overseeing data security and management.
The deal needs approval from the Chinese government, but – while signing the executive order – Trump insisted that he’d got that approval during a conversation with Chinese President Xi Jinping last week. Trump told reporters, “I told him what we were doing and he said go ahead with it”.
US Vice-President JD Vance also spoke as the order was being signed, revealing that the TikTok US deal will be worth about $14 billion. He then added, “There was some resistance on the Chinese side, but the fundamental thing that we wanted to accomplish is that we wanted to keep TikTok operating, but we also wanted to make sure that we protected Americans’ data privacy as required by law”.
Parties involved in the deal now have 120 days to complete the transaction. While ByteDance and the Chinese government are yet to formally comment on the deal, it does seem likely that the change of ownership will now go ahead ensuring that TikTok can continue operating in the US market.
Which is good news for the artists, creators and record labels who rely on TikTok as a key marketing and fan engagement platform. Even if Trump’s billionaire buddies will now be in control.
Going into a little more detail about the sale of TikTok US, Trump’s executive order says that the TikTok app – and other popular ByteDance apps like CapCut – will be operated in the US by “a newly established joint venture” that will be “majority-owned and controlled by US persons”. ByteDance will retain a stake, but no more than 20%.
The new JV “will be run by a new board of directors and subject to rules that appropriately protect Americans’ data and our national security”. ByteDance will continue to own the all-important TikTok algorithm, but “the operation of the algorithms and code” in the US will be “under the control of the new joint venture”.
And while ByteDance will continue to evolve that algorithm, there will be “intense monitoring of software updates, algorithms and data flows by the US’s trusted security partners” and “all recommendation models, including algorithms, that use US user data” will be “retrained and monitored by those trusted security partners”.
Plus “the divestiture prohibits the storage of sensitive US user data in a manner that would place such data under the control of a foreign adversary and requires such data be stored in a cloud environment run by an American company”.
So what can possibly go wrong with that? Although this transaction is now meant to close within 120 days, given Trump has repeatedly pushed back the deadline set by Congress for a sale, there is presumably some flexibility on that. But, in theory, TikTok in the US should be run by TikTok US from early next year.
