Trump grants TikTok a temporary respite in the American market
In a significant development, American investors, including Oracle, Silver Lake, and Andreessen Horowitz, are set to acquire an 80 percent stake in a new US subsidiary of TikTok, following a recent agreement. However, the exact identities of these American investors have not been explicitly named in the search results, as reported by The Wall Street Journal.
The reprieve for TikTok in the US continues, with President Donald Trump granting another extension, allowing the app to remain operational until at least December 16. This extension comes despite the lack of a legal basis for such prolonged delays, as Trump has repeatedly extended the grace period for TikTok.
The US law stipulates that neither the Chinese government nor Bytedance, TikTok's current owner, can have control over the algorithm used by the app in the US. This requirement is a key aspect of the ongoing negotiations.
Critics in the US have raised concerns about the potential risks posed by TikTok, with some viewing it as a possible avenue for the Chinese government to influence public opinion. However, Trump has recently emphasised TikTok's role in his election campaign, particularly in mobilising young voters.
Oracle, backed by Trump supporter Larry Ellison, will retain its role as TikTok's technical service provider in the US. The US government has also proposed a framework for a TikTok deal with China, where Bytedance, the current owner, is based.
China's regulations also play a significant role in this saga, as Bytedance, with its large headquarters in Beijing, is subject to many Chinese regulations. The sales deal could take another 30 to 45 days to finalize.
Bytedance, despite being considered a Chinese company, is 60 percent owned by international investors and is based on the Cayman Islands. The rest of the new US subsidiary would remain with Chinese shareholders.
Founders such as Zhang Yiming hold only a 20 percent stake but control the company through shares with more voting rights. The latest announcements suggest that this pause is the first to meet the condition of successful sales negotiations.
TikTok would continue to use the algorithm developed in China to determine which videos are shown to users in the US. This raises questions about data privacy and security, issues that have been a concern for many.
Trump and Chinese President Xi Jinping are expected to finalise the agreement in a conversation on Friday, according to US Treasury Secretary Steven Mnuchin. The future of TikTok in the US remains uncertain, but the ongoing negotiations offer a glimmer of hope for the popular social media platform.
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