New venture aims to secure US data and avoid nationwide TikTok ban
Donald Trump’s administration is expected to receive an estimated $10 billion fee from investors involved in the recently completed deal to take control of TikTok’s US operations, according to a report by The Wall Street Journal on Friday citing sources familiar with the matter.
ByteDance, the Chinese parent company of TikTok, finalised an agreement in January to create a majority American-owned joint venture aimed at securing US user data and preventing a potential US ban on the popular short-video platform used by more than 200 million Americans.
TikTok USDS Joint Venture LLC will oversee the security of US user data, apps and algorithms through enhanced data-privacy and cybersecurity safeguards, although only limited details about the divestiture have been made public.
JD Vance said in September that the newly formed US company could be valued at around $14 billion.
According to The Wall Street Journal, the payment is part of an arrangement under which investors aligned with the administration gained control of TikTok’s US operations from its Chinese parent ByteDance.
The fee comes in addition to the investments already made to establish the new entity that will operate the app in the United States.
Investors including Oracle, Silver Lake and Abu Dhabi’s MGX, along with other backers, reportedly paid about $2.5 billion to the US Treasury Department when the deal was finalised. Further payments are expected until the total reaches $10 billion, the Journal reported.
TikTok and the The White House did not immediately respond to requests for comment from Reuters.
Officials within the administration have argued the fee is justified, pointing to Donald Trump’s role in preserving TikTok’s US operations and leading negotiations with China to finalise the deal while addressing lawmakers’ national security concerns, according to the Journal.
Earlier this month, Trump and Pam Bondi were sued by retail investors in two rival social media companies seeking to overturn the US president’s approval of the agreement allowing ByteDance to create a majority American-owned joint venture.
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