TikTok Establishes Standalone US Company to Evade Nationwide Ban
The popular short-video platform TikTok has recently finalized a significant deal with investors to establish its own standalone US company, effectively dodging a potential nationwide ban that had loomed for years due to concerns over the app's reliability and transparency. This strategic move comes as the app, which boasts over 200 million American users and 7.5 million businesses, transitions to a fully US-run version led by American investment firms, some of which have close ties to former President Donald Trump.
California Governor Launches Probe into Alleged Censorship
In a twist to the story, California Governor Gavin Newsom has initiated an investigation into claims that TikTok is silencing voices critical of President Trump. The Democrat, a longtime opponent of Trump, announced the probe on Monday via a post on social media platform X, stating, "It's time to investigate. I am launching a review into whether TikTok is violating state law by censoring Trump-critical content." His office added that they had independently confirmed instances of suppressed anti-Trump posts following the app's recent ownership restructuring.
Governor Newsom highlighted user complaints, including a screenshot shared by someone blocked from sending the word "Epstein", relating to the late Jeffrey Epstein, a former associate of Trump and convicted sex offender whose files sparked bipartisan backlash last year.
TikTok's Response and Technical Glitches
TikTok has pushed back against the allegations, attributing the removal of content to a data-centre outage rather than deliberate censorship. A representative for TikTok's US joint venture stated online, "Although the network has been restored, the outage triggered a series of system failures that we are actively working to rectify." This explanation was reported by The Guardian prior to Newsom's post, suggesting the platform is addressing technical issues rather than engaging in political suppression.
Details of the New TikTok US Ownership Structure
The new deal creates a separate US company named TikTok USDS (US Data Security), which will operate independently with a focus on American interests. Key features of this entity include:
- Secure storage of American user data to enhance privacy and compliance with cybersecurity regulations.
- Retraining of its algorithm using US data to improve content relevance and safety.
- Strengthened safety measures through improved moderation and reporting systems.
The company is led by CEO Adam Presser and supported by a predominantly American board, which includes TikTok CEO Shou Zi Chew, ensuring oversight from US-based leadership.
Ownership Breakdown of TikTok US
TikTok US is structured as a joint venture with multiple investors sharing ownership, rather than being controlled by a single entity. The ownership distribution is as follows:
- ByteDance, the Chinese parent company, retains a 19.9% stake, despite earlier laws from the Biden era calling for a full divestment.
- Major partners each hold 15% stakes, including:
- Silver Lake
- Oracle, the cloud giant run by Trump ally Larry Ellison
- MGX, the UAE's AI fund led by security chief Tahnoun bin Zayed
- Eight additional partners with varied stakes, such as the Dell Family Office led by Michael Dell, a Trump supporter, along with Vastmere, Alpha Wave, Revolution, Merritt Way, Via Nova, Virgo Li, and NJJ Capital.
This diversified ownership aims to align TikTok's operations with US interests while navigating regulatory challenges and maintaining its massive user base in the country.
