TikTok said it has created a new structure to manage its operations in the United States. Under this structure, TikTok's US operations will be managed through a separate entity. The new entity will be owned primarily by US investors. The board will consist of seven directors, including TikTok CEO Shou Ji-chiu. Chinese owner ByteDance will hold a 19.9 percent stake.
TikTok's core strength is its content recommendation algorithm. This algorithm determines which videos appear in a user's 'For You' feed. Under the new agreement, a license for this algorithm has been granted to US technology company Oracle. Earlier, Oracle was looking after the data of TikTok users in the US through a security system called 'Project Texas'.
This time Oracle is getting a bigger responsibility. The algorithm will be retrained based on data from US users. The updates will also be done within the US. TikTok claims that both user data and the algorithm will be stored in Oracle's secure US cloud.
But the deal has also raised questions. Some Democratic politicians have expressed concern that former President Donald Trump's close ties to the new investor group could influence what is shown on TikTok. Senator Ron Wyden has previously said that even if there is a change of ownership, users may not benefit if there is no transparency. Another senator, Ed Markey, has called for a congressional investigation into the details of the deal.
The big question for users is - will they have to download a new app? According to analysts, that is unlikely. The United States is TikTok's biggest market. There are about 200 million users there. If the new app is mandatory, both users and advertisers may be annoyed. So TikTok wants to send the message that 'business as usual'.
However, there have been some changes in the policy. TikTok has introduced new Terms of Service for US users. Now the agreement with the user is with the new US company. It says that people under the age of 13 can only use TikTok with the 'Under 13 Experience'. In addition, the user has to accept the risk of creating incorrect or misleading content using generative AI.
It is not yet clear how the content experience will change if the algorithm changes. Experts say that there is little chance of a sudden big change. However, some subtle differences may appear over time. The ability to show content according to personal preferences may be somewhat weaker. The presence of domestic content compared to international content may also increase.
Still, TikTok says US users won't be deprived of the global experience. US creators will be able to reach a global audience. Businesses will also be able to remain active in international markets.
The deal also secures the future of ByteDance's other apps, Capcut and Lemon8, which will be subject to the same protections as TikTok.
Overall, the new agreement sees TikTok moving towards a more secure framework in the US. However, it remains to be seen how much this security will change the platform's global character.
