American investors will take over the US version of TikTok as part of agreements signed on Thursday by the app’s Chinese owner, ByteDance. The ramifications could be huge for the millions of creators and fans of the immensely popular short-video app, but at the moment, they are mostly unknown.
The part-American, part-global investor group includes tech giant Oracle, a California-based private equity fund called Silver Lake, and the United Arab Emirates investment firm MGX. Those companies will hold an 80.1% stake in the venture, with Chinese-based ByteDance retaining a 19.9% stake. The joint venture will be governed by a new seven-member board of directors, with a majority of American members.
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TikTok thus avoids being banned in the US, something President Donald Trump threatened to do during both of his terms. ByteDance was facing a Jan. 23 deadline to divest its US assets or risk having the app banned in the US.
For years, the US government has raised concerns about potential national security risks stemming from TikTok’s Chinese ownership, arguing that a company with ties to the Chinese government could gain access to the data of Americans who post on the platform.
“The US joint venture will be responsible for US data protection, algorithm security, content moderation, and software assurance,” TikTok CEO Shou Chew told employees in a memo. “It will also have the exclusive right and authority to provide assurances that content, software, and data for American users is secure.”
It’s estimated that TikTok has more than 170 million American users, as well as millions of creators, some of whom earn their living by making videos on the app.
Roll for algorithm?
One of those creators is Jacob Pauwels of the immensely popular Roll for Sandwich videos, where he rolls dice, Dungeons & Dragons-style, to determine what kind of sandwich he’s going to make. Millions of people regularly watch his videos on TikTok, YouTube, Instagram and other platforms.
Pauwels said it was “stressful’ not knowing if TikTok — his largest platform — was going to be banned in the US. Now that the app’s fate seems a bit more secure, he said he still has concerns about American majority ownership of the brand.
“I do worry about possible issues with censorship that could arise,” Pauwels told CNET. “So many of the digital privacy concerns that have been cited as reasoning for the TikTok ban and forced sale of the platform can absolutely be applied to American companies like Meta, so I feel like there are definitely some other motivations driving those who have wanted to shut down the platform or shift its ownership.”
When it seemed a possibility that TikTok could be banned in the US, Pauwels made the wise decision to share his videos on other platforms.
“I have made a conscious effort to diversify my earnings across multiple platforms to ensure I am not overly reliant on the income stream from any particular one,” he said. “As ownership of TikTok changes, there is no guarantee that things will continue being the same status quo, but even if something like TikTok’s Creator Program were to go away, while it would be a substantial hit to my income and livelihood, it would no longer be career-ending.”
US consumers will have to adjust
Kelsey Chickering, principal analyst at global research and advisory firm Forrester, said TikTok’s algorithm definitely will change for US consumers.
“One of the most important questions in this deal has always been whether the algorithm would come with the sale, and the answer is ‘yes and no,'” Chickering said in a statement. “This US joint venture will have to retrain the recommendation algorithm on US user data — meaning the experience will feel different, and users will very likely notice.”
Simply stated, an algorithm is a method for predicting the type of content that consumers will enjoy. If you watch a number of TikTok recipe videos, the app will likely push more of those your way. TikTok and other content platforms utilize machine learning to analyze the content you like and then display more of that, aiming to keep you engaged on the app for as long as possible.
With US investors taking over control of the US version of TikTok, Chickering said the data that the app analyzes will be different.
“While the algorithm may be the same in the US version, the data inputs are not,” Chickering told CNET. “If the US joint venture trains this US algorithm on US-only data, not global data, the content mix will naturally shift. Users might find their feeds feel less culturally edgy and far less globally minded.
“The algorithm is the heartbeat of TikTok’s addictive experience, and the jury’s out on whether a US-only TikTok will replicate the magic of the original experience,” she said. “If it doesn’t, creators and consumers may flock to YouTube Shorts and Instagram Reels.”
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