Trump Approves TikTok's US Operations Plan: Joint Venture Responsible for Data and Content Security

On September 25th, US President Trump issued an executive order declaring that the new TikTok US operations plan complies with relevant US legal requirements, allowing TikTok to continue operating in the US.

According to the plan, a dedicated joint venture, "TikTok USDS Joint Venture," will be established to oversee TikTok's data and content security in the US, with a valuation of $14 billion.

This represents only a portion of TikTok's US operations; earlier reports had the entire US business valued at nearly $40 billion.

TikTok's US operations have been a thorny issue for years. The US government has proposed various options for various reasons, including banning TikTok from operating in the US. ByteDance, TikTok, and the Chinese government have also been actively pursuing and negotiating.

On September 14-15, US and Chinese trade delegations held talks in Madrid, Spain.

Wang Jingtao, Deputy Director of the Cyberspace Administration of China, stated after the meeting that China and the United States, while fully respecting the wishes of the companies and market principles, reached a basic consensus on resolving the TikTok issue through outsourcing operations of TikTok's US user data and content security business, as well as licensing the use of its algorithmic and other intellectual property rights. The Chinese government will review and approve matters related to TikTok's technology exports and intellectual property licensing in accordance with the law.

Li Chenggang, China's International Trade Representative and Vice Minister of Commerce, stated that China and the United States had candid and in-depth discussions on TikTok and China's concerns, and reached a basic framework consensus on properly resolving TikTok-related issues through cooperation, reducing investment barriers, and promoting relevant economic and trade cooperation.

He emphasized that China consistently opposes the politicization, instrumentalization, and weaponization of scientific and technological and economic and trade issues, and will never seek any agreement at the expense of its principled stance, corporate interests, or international fairness and justice.

On September 16, Trump signed an executive order extending the grace period for the TikTok ban for the fourth time, this time by three months, to December 16.

On the evening of September 19th, ByteDance issued a statement stating that it will proceed with relevant work in accordance with Chinese legal requirements, ensuring that TikTok US continues to serve American users.

The finalized TikTok US operating plan includes two corporate entities:

First, ByteDance TikTok US (BD TikTok US) will be responsible for the primary operations of TikTok's US business, including related operational activities such as commerce, e-commerce, and brand advertising, as well as global connectivity, product, and engineering support. ByteDance will own 100% of the company.

Second, the new TikTok US Data Security Joint Venture will be solely responsible for TikTok US data security, content assurance, software assurance, and related local operations. External investors will be brought in to increase capital and expand its shares, but ByteDance will remain the largest single shareholder, holding a 19.9% ​​stake.

A reasonable sharing of commercial revenue will be permitted between the two entities.

In addition, ByteDance will continue to own the intellectual property rights to the TikTok algorithm and, through licensing, will allow the TikTok US Data Security Joint Venture to use it in the US and charge a licensing fee. This will be subject to approval by relevant Chinese authorities in accordance with Chinese law. Clearly, this is a mutually acceptable and mutually beneficial solution for both TikTok and the United States. It fully complies with the laws and regulations of both China and the United States, ensures TikTok's normal operations and interests in the United States, and particularly alleviates US concerns about the security of TikTok's data and content.

Wang Xiaohong, a researcher at the China Center for International Economic Exchanges, stated that the new TikTok US operating plan is essentially "consigned operation," a common cross-border operation model.

For example, Apple has entrusted "Cloud Guizhou" to operate iCloud services in the Chinese market since 2018. Microsoft has entrusted 21Vianet to operate and sell Microsoft cloud services such as Azure in China since 2012. Blizzard has successively entrusted The9 and NetEase to operate the "World of Warcraft" game in China.