TikTok China (Bytedance) has entered into a new 50% joint venture with Oracle, Silver Lake, and Abu Dhabi-based MGX, effective 22 January. This enables TikTok to continue to operate in the USA.
TikTok China was and still is considered a considerable USA national security threat. The new deal under the Protecting Americans from Foreign Adversary Controlled Applications Act meets the basic conditions to continue operating. Analysts say it’s too little, too late and too lenient, as Chinese interests still control 50% – enough to ensure a stalemate on critical matters.
- The new investors include Oracle, Silver Lake and MGX, with 15% each (45%).
- Certain investors of ByteDance will hold 30%
- ByteDance will retain 20%.
Division of duties
Bytedance said the new entity will be responsible for protecting U.S. data, U.S. content moderation, and software assurance. It will retrain the video app’s core content recommendation algorithm on U.S. user data to ensure the content feed is free from outside manipulation.
A new seven-member, American-majority board will govern the US operations.
Oracle will serve as the ‘trusted security partner’ in charge of auditing and validating that it complies with ‘agreed upon National Security Terms’. Sensitive U.S. data will be stored in Oracle’s U.S.-based cloud.
TikTok will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing. Bytedance remains the sole curator of its secret algorithm.
Jim Secreto, a former Treasury official who worked on TikTok policy during the Biden administration, criticised the arrangement, arguing that it fails to achieve the clean separation Congress intended.
The law requires a clean break from ByteDance. This structure doesn’t meet that standard. It’s more of a franchise deal that leaves TikTok’s core technology in China, than a true divestment. By sidestepping the guardrails Congress set, the national security concerns around covert data access and manipulation of the algorithm remain unresolved.
Australia is still at risk
The joint venture is for the USA only. Its scope does not extend to the western world, where TikTok China still controls the algorithm, content and what users see.
TikTok has been proven to peddle unacceptable content. The Federal government must either ban TikTok or insist on its ownership being placed in safer hands.
TikTok China is very much part of the Chinese Communist Party (CCP)
- It has an internal CCP committee, which is a legal requirement for large companies in China.
- Leadership: Zhang Fuping, a ByteDance Vice President, serves as the company’s CCP Committee Secretary. He has stated that the company should “transmit the correct political direction” to every product line.
- Ideological Sessions: The committee holds sessions for employees to study CCP ideology and the teachings of Chinese leader Xi Jinping.
- In 2021, the state-owned China Internet Investment Fund purchased a 1% ‘Golden Share’ stake in ByteDance. This allows the Chinese Government to appoint one of the subsidiary’s three board directors. Wu Shugang, a government official with a background in propaganda, currently holds this seat.
- Regulatory Partnerships: ByteDance has strategic partnerships with the Chinese Ministry of Public Security for public relations and “offline activities”
- It is bound by the 2017 National Intelligence Law, which compels organisations to support and cooperate with state intelligence work. It identified US journalists in China and Hong Kong protestors and activists.
- ByteDance has reportedly reported users on its Chinese apps (Toutiao and Douyin) for “historical nihilism”—content that contradicts official CCP history—and was directed by regulators to increase censorship further.
- TikTok invests heavily in psyops research. (Psychological Operations). These are military activities using propaganda and tactics to influence the emotions, motives, and behaviour of foreign audiences, aiming to support military objectives by shaping beliefs, weakening resistance, or encouraging specific actions, using methods from leaflets and radio to digital media and deception. It’s about narrative control to win the ‘hearts and minds’ or demoralising enemies without physical force, leveraging communication to create planned psychological reactions.
I’mTech’s insight: TikTok China can still merrily manipulate Australians.
Our under-16s social media ban does nothing to change TikTok China’s attitude or service to the rest of Australia or the world.
In 2023, TikTok was banned from most state and all federal government devices because of severe security issues. Yet, the government does not see fit to protect its citizens, businesses, corporations, education institutions and more.
TikTok is a founding signatory of the Australian Code of Practice on Disinformation and Misinformation, which is a voluntary industry code intended to combat the spread of harmful content.
This is a sham. It has unresolvable systemic failures. It faces many challenges:
- Inconsistent platform adoption (what is suitable for one is not suitable for all, so nothing happens)
- Reporting gaps (inconsistent reporting by members, stalled fact-checking support).
- Focus on process (not results).
- Attempting to balance the right to free speech over harmful disinformation (that is not adequately defined).
- Deliberate delay by some members who will not budge from their positions (Twitter/X has resigned twice)
- Non-binding recommendations watered down to please all.
- The ACMA lacks the power, and calls for stronger mandatory laws have been ignored.
- All it has achieved is a call for AI content labelling.
It is tied up in defining terms, watering them down to ‘potential harm’ to achieve consensus. Winston Churchill said, ‘Committees are used as a bureaucratic tactic to delay action or avoid making difficult decisions.’
Read more about TikTok harm here.
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