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JUANA SUMMERS, HOST:

Plans are moving forward to spin off the U.S. operations of TikTok so that the popular app doesn’t go dark here. According to an internal company memo obtained by NPR, the Chinese-owned company has signed a deal to form a new joint venture to run the app in the U.S. NPR’s John Ruwitch is here to talk about it. Hi there.

JOHN RUWITCH, BYLINE: Hey there.

SUMMERS: So, John, big question – does this mean that people will still be able to use TikTok in the U.S.?

RUWITCH: (Laughter) Yeah, this is a step in that direction for sure. Remember, this all started with concerns about TikTok’s ties to China – concerns that it could be used to harvest American users’ data or influence them. And that prompted Congress to pass a law last year banning the app unless Beijing – unless its Beijing-based parent company, ByteDance, spun it off. This internal memo that we got from the TikTok CEO to employees lays out some details of that deal.

SUMMERS: What does it say?

RUWITCH: Well, a U.S. joint venture is going to be created that will be majority owned by American investors, and those include, among others, the software and cloud computing company Oracle and the private equity firm Silver Lake. A consortium of investors that they lead is going to hold 50% of the company. Another third, roughly, is going to be owned by affiliates of existing investors of ByteDance. And then ByteDance itself is going to hold just under 20% of the company. I reached out to TikTok and those companies. They either declined to comment or didn’t respond.

SUMMERS: John, what did this memo say about how this deal addresses those U.S. security concerns that we were talking about?

RUWITCH: Yeah. It highlighted sort of all the ways that the U.S. entity would have more control over this app, which, by the way, has 170 million U.S. users. So U.S. user data is going to be stored in the U.S. and overseen by Oracle. The U.S. group is going to oversee all decisions about content moderation. And TikTok’s famous algorithm – that sort of secret sauce that sends you videos that you love that you didn’t know you were going to like – is going to be retained – retrained, excuse me, on U.S. user data. So the memo says this is going to keep our feeds free from outside manipulation. But an expert I talked to said things are a little squishy on that final point.

SUMMERS: Squishy meaning what, exactly?

RUWITCH: Yeah, well, the deal highlights U.S. oversight of the app and algorithm security, but it doesn’t explicitly say that the U.S. entity will own the algorithm. Jim Secreto thinks that that ambiguity is really noteworthy. He worked on TikTok policy in the Treasury Department during the Biden administration. He says if indeed the code continues to be owned by ByteDance and just licensed to the U.S. entity, then the deal is legally flawed.

JIM SECRETO: There might be some additional protections here. It’s certainly better than nothing. But it doesn’t adequately address the national security risks. So those national security risks still persist, and they persist in a way that Congress thought was unacceptable.

RUWITCH: And one more detail. Algorithms like the – like this one are actually considered restricted technology under Chinese law and can’t be exported from China without special permission. And we have not seen that permission yet from Beijing.

SUMMERS: So what have we heard from the White House?

RUWITCH: Yeah. I reached out to the White House. They declined to comment. But you’ll recall that the White House did help broker this deal, and when it started to take shape in September, the president issued an executive order saying that the outlines of the deal complied with the law. So it’s going forward. If everything goes smoothly, the TikTok internal memo says the closing date for this deal is January 22.

SUMMERS: NPR’s John Ruwitch, thank you.

RUWITCH: You’re welcome. Transcript provided by NPR, Copyright NPR.

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