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TikTok’s owner ByteDance has finalised a ‘US$14 billion’ deal to sell its US business to a group of investors backed by Donald Trump.
ByteDance will retain a 20 per cent stake in the operation, control of which will pass to a consortium that includes tech giant Oracle, private equity firm Silver Lake, Abu-Dhabi based AI company MGX and the investment arm of Michael Dell.
The agreement removes the threat of the short-form video platform being banned in the country on national security grounds.
Successive governments have expressed concerns that as a Chinese-owned company, TikTok was obligated to share user data with the government in Beijing if it requests it – a condition that could potentially expose the personal information of its American user base.
For its part TikTok denied the allegations, adding that it had taken steps to ensure that data related to its US user base cannot be accessed by ByteDance employees in China. An investigation by the Wall Street Journal (WSJ), though, found evidence of “unofficial” data sharing.
Trump first tried to force a sale of TikTok during his first term in office before Joe Biden’s administration passed legislation that obligated ByteDance to find a buyer or face banishment. The legislation never came into effect, with Trump extending a stay of execution on several occasions to help facilitate the sale which has now finally been agreed.
It is thought one of the main sticking points was how an independently-run TikTok would manage and license the hugely valuable algorithm that powers how users discover content. Oracle will act as custodian of the algorithm as per the terms of the agreement.
It is unclear how the algorithmically-generated feeds will change under American-led ownership, but users will not have to download a new application to continue using the service.
Although the prospect of a ban on TikTok in the US never felt more than an empty threat, this deal provides certainty for the app’s estimated 200 million American users and the businesses that rely on it to reach and engage customers.
The sports industry is no exception, and it will have been watching events closely. TikTok’s ability to reach younger users who don’t engage with traditional television or other social media platforms is unmatched, while its algorithmic approach to content delivery helps find engaged audiences.
The company has formal relationships with many major rights holders, while most properties have an official presence on the platform. Meanwhile, TikTok is hugely popular with athletes and content creators.
The loss of such a valuable channel would have been disastrous to an industry already grappling with how it attracts new fans in an era where there is so much competition for their attention. It would have been difficult for any like-for-like replacement to recreate TikTok’s technology and its crucial mass.
But that’s not to say that questions don’t remain. It’s unclear how a US-backed TikTok powered by US data will behave in the wild and what features will be made available to consumers. Will US TikTok become significantly different from the rest of the world and will American’s have a vastly different experience?
But for now, sport can breathe easy.
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