For a company repeatedly branded a national security threat, TikTok has emerged from its U.S. standoff in remarkably good shape.
What happened: The U.S. and China have reportedly closed their deal to sell TikTok’s American business to a group of U.S. investors, ending a years-long saga over the fate of the platform, per Semafor.
The pact gives TikTok parent ByteDance just under 20% of the U.S. spinoff, while Oracle, Silver Lake, and UAE investment firm MGX will each get a 15% stake.
On this side of the border, a judge ruled on Wednesday that TikTok will be able to continue operating its Canadian subsidiary, despite Ottawa ordering the company to shutter its operations in 2024 on the advice of its security and intelligence agencies.
Why it matters: Considering Western governments' rhetoric about TikTok being a Trojan horse for the Chinese government, this deal is a puzzling end result. Not only did TikTok avoid an outright ban, but ByteDance is retaining a ton of control over the platform.
The Chinese firm will still run the American ad and e-commerce businesses, and its controversial algorithm will now be leased to the U.S. company for a 20% cut of its revenue.
As one analyst told The Economist, “ByteDance may not own the car, but it will still own the engine.”
Our take: At least a third of the population in both Canada and the U.S. is now on TikTok. It’s not that the platform is suddenly perceived as less of a national security threat to either country — it’s simply become too popular to be outlawed.—LA