Major U.S. Investors Launch TikTok Joint Venture; Impact on Canada Minimal

A new joint venture involving TikTok and major American investors is set to launch, but experts suggest that Canadian users will likely experience no significant changes to the popular social media platform. The announcement comes as TikTok has signed agreements with three prominent investors, including Oracle, Silver Lake, and the Emirati investment firm MGX. The deal is expected to close on January 22, 2024.

Robert Falzon, head of engineering at Check Point Software Technologies Ltd., emphasized that this joint venture is primarily governed by U.S. law and will not notably affect Canadian users on a daily basis. “This deal is based on U.S. law only, and it’s really not that impactful for Canadians,” Falzon explained. Canadians will continue to use the international version of the app, which remains owned and influenced by its Chinese parent company, ByteDance Ltd..

TikTok has outlined that the new U.S. joint venture will allocate ownership as follows: the investor group will hold 50 percent of the venture, with each of the three investors claiming a 15 percent share. ByteDance itself will retain a 19.9 percent stake, while affiliates of existing investors will control an additional 30.1 percent, as detailed in an internal memo obtained by The Associated Press.

In line with this new structure, U.S. user data will be stored locally in a system managed by Oracle. The memo indicated that American users can expect to maintain their current experience on the platform, with advertisers continuing to reach global audiences unaffected by the changes. Furthermore, TikTok’s algorithm, which drives its engaging video feed, will be retrained using U.S. user data to ensure that content remains free from external influences.

Canadian Users Remain Unaffected by New Developments

Despite the establishment of the U.S. joint venture, Canadian users’ data will still be stored in Singapore and Malaysia, and to a lesser extent, in the United States. As Falzon noted, the algorithm for Canadian users will continue to be shaped by ByteDance.

The Canadian government has taken steps regarding TikTok’s operations, having ordered the app to cease its activities in Canada in 2024; however, it did not impose an outright ban. This decision followed a national security review of ByteDance. Additionally, in February 2023, Ottawa banned TikTok from government mobile devices amid concerns raised by federal and provincial privacy commissioners.

In summary, while the new joint venture marks a significant step for TikTok in the United States, the implications for Canadian users appear limited. They will retain access to the app’s international version, governed by its established policies and data management practices.