AsianFin -- U.S. Vice President JD Vance on Sunday touted the independence of TikTok in the United States under the deal set to keep it operating in the country.
Credit：Freepik
Vance in an interview with Fox News said he felt optimistic about the future of TikTok in the U.S. from ByteDance Ltd. “I feel very confident that we have successfully separated this company from TikTok global and actually made it so that we can control people’s data security,” Vance said.” “We can ensure that the algorithm is not being used as a propaganda tool by a foreign government.”
U.S. President Donald Trump last Thursday signed an executive order a approving a deal to maintain TikTok alive in the U.S. while protecting national security. Under the planned arrangement, TikTok’s U.S. app will be run by a newly established joint venture based in the U.S. The new venture will be majority-owned and controlled by U.S. individuals, and less than 20% of the entity will be held by TikTok’s Chinese parent ByteDance and its affiliates, with the remaining stake being owned by U.S. investors, rather than the federal government.
Vance on Thursday said the transaction values the American-owned TikTok entity at $14 billion. While more details about the group of investors will be announced in the coming days, Vance indicated that Oracle will play a central role in the future operations of the app.
Vance on Sunday stressed TikTok U.S. will be controlled by Americans, no longer by any Chinese companies once the deal implemented. “At the end of the day, I believe that north of 80% of the company will be owned by the American investors and their partners,” he said. “This is not something where the Chinese or any Chinese entity has a large stake of the table.”
The new U.S. TikTok would be divided into two companies: one is a new joint venture that was announced by Trump, which will serve as the backend operations to the U.S. company and handle U.S. user data and algorithm; another is an entity that will continue to be wholly owned by ByteDance and will control the revenue-generating business operations such as e-commerce and advertising, according to Reuters’ sources on Friday.
ByteDance will cede control of TikTok’s data, content and althorithm to the joint venture and serve as the largest minority shareholder, and remain ownership of TikTok U.S. business operations, per the souces.
Under the deal, ByteDance is expected to receive a licensing fee on all revenue generated from making its algorithm available to the U.S. operating entity as well as a share of the profit in proportion to its equity stake, Bloomberg reported on Friday, citing people familiar with the matter. Given the reported profit sharing arrangement, ByteDance will probably get around 50% of the profit from TikTok’s U.S. operation despite its sales of a majority of ownership to American investors.
Specifically, the report noted ByteDance may get 20% of its rights on incremental revenue, or revenue generated through the algorithm, and would take about 20% of the profit from the remaining revenue, in line with its remaining equity stake.
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