In a major move to secure its future in one of its largest markets, the social media giant TikTok has struck a crucial deal with American investors. This agreement aims to address longstanding national security concerns in the United States and prevent a potential ban that has loomed over the platform for years.
From Chinese Startup to Global Phenomenon
The journey of TikTok is a remarkable digital success story. Originally launched in China in 2016 by the tech company ByteDance under the name Douyin, its international version, TikTok, debuted in 2017. Its growth exploded after merging with the lip-syncing app Musical.ly a year later. Today, TikTok boasts over a billion users globally, with more than 170 million in the United States alone—a figure representing nearly half the country's population.
The app's core strength lies in its powerful "For You" page algorithm. Unlike platforms that prioritize content from followed accounts, TikTok's endless scroll is driven by user engagement and viewing habits. This system can catapult an unknown creator to viral fame overnight, a model now widely emulated by competitors. While initially focused on 15-second clips, the platform now allows some users to upload videos up to 60 minutes long.
Global Scrutiny and Regulatory Battles
TikTok's rapid rise and Chinese ownership have placed it at the centre of intense international scrutiny. Governments worldwide have expressed fears over data privacy and potential influence from Beijing.
India banned TikTok in 2020, citing national security, removing it from a massive user base. In a significant blow from Europe, the European Union hit TikTok with a fine of 530 million euros (about $620 million) in May for failing to adequately protect European user data from access by Chinese authorities. TikTok is appealing this decision.
Concerns also extend to the safety of younger users. In a landmark decision this month, Australia banned children under 16 from major platforms like TikTok, Instagram, and YouTube, putting the onus on tech firms to enforce the rule. Other nations worry about the app fostering harmful echo chambers and failing to control illegal content. Albania imposed a one-year ban in March following the death of a teenager linked to a social media-fuelled conflict.
The US Ultimatum and a New Path Forward
The most significant threat emerged from the United States. In 2024, the US Congress passed legislation mandating that ByteDance divest its control of TikTok's US operations or face a complete ban.
The breakthrough came on Thursday. In an internal memo seen by AFP, TikTok's CEO, Shou Chew, announced that the company and ByteDance had agreed to form a new joint venture in the United States. Major investors in this venture include software giant Oracle—whose chairman Larry Ellison is a known ally of former President Donald Trump—along with Silver Lake and Abu Dhabi's MGX.
"The US joint venture will be responsible for US data protection, algorithm security, content moderation, and software assurance," Chew stated. This structure is designed to create a firewall, ensuring that American user data and the platform's core operations are managed independently from Chinese influence, thereby complying with US law and averting the ban.
This deal represents a pivotal moment for TikTok, transforming its operational structure in its most contentious market. While it may ease immediate political pressure in the US, the platform continues to navigate a complex global landscape where concerns over data sovereignty, youth safety, and geopolitical tensions remain paramount for social media's most dominant short-video app.
