US-China agreement enables TikTok to continue operating in the United States
In a significant turn of events, the Trump administration has announced an agreement with China to keep TikTok operating in the United States. This resolution brings an end to a saga that has lingered for nearly a year.
The deal, as reported in April, will spin off TikTok's US operations into a new company based in the US and majority-owned and operated by US investors. The US TikTok business is set to be acquired by a consortium consisting of Oracle, the venture capital firm Andreessen Horowitz, and the private equity firm Silver Lake. ByteDance, TikTok's China-based parent company, will retain about 20% ownership, with ByteDance keeping the single largest ownership stake at 19.9%.
Oracle, who has been working closely with the White House on a plan to control the app's operations, addressing national security issues, is likely to take a stake in the new TikTok entity. Silver Lake is also expected to invest. The agreement will include existing investors in ByteDance, as well as new investors.
The agreement requires TikTok's American assets to be transferred from China's ByteDance to US owners. A framework agreement was reached by officials from both countries on Monday, and a final confirmation on the deal is expected on Friday in a call between President Trump and Chinese President Xi Jinping.
The deadline for finalizing the agreement is December 16, suggesting much work needs to be done to close the complex transaction. However, US Treasury Secretary Steven Mnuchin stated that the commercial terms of the TikTok deal have been mostly agreed upon since around March.
The Trump administration has not enforced the law regarding TikTok due to concerns about angering its user base and disrupting political communications. The agreement may require approval by the Republican-controlled Congress. The deal, as it stands, is expected to be closed within the next 30 to 45 days.
The U entity that will own TikTok's American assets will have an American-dominated board, with one member designated by the US government. This move is intended to ensure the app's operations comply with American laws and regulations, addressing national security concerns.
Oracle will keep its cloud deal with TikTok, which should help maintain the app's functionality and security. This deal, if confirmed, will resolve the uncertainty surrounding TikTok's future in the US, allowing millions of users to continue enjoying the popular app.
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