Zhou Shouzi’s internal letter revealed TikTok’s US plan: Byte will retain e-commerce and advertising, and the joint venture will be responsible for data security

On December 18, local time, TikTok CEO Zhou Shouzi issued an internal letter updating TikTok’s U.S. business progress. An internal letter stated that ByteDance and TikTok have signed agreements with three investors and will establish a new TikTok US joint venture. The new joint venture, called TikTok USDS Joint Venture LLC, will be responsible for data protection, algorithm security, content review and software assurance in the United States.

TikTok’s other entities in the United States, which are wholly owned by ByteDance, will continue to be responsible for business activities such as e-commerce, advertising, and market operations, as well as the global interconnection of TikTok products. It is reported that matters related to the agreement will be completed no later than January 22, 2026. This is consistent with TikTok’s US plan previously exposed by domestic media.

According to previous media reports, ByteDance will continue to own the intellectual property rights of TikTok algorithms, authorize the new joint venture to use them, and charge licensing fees to the latter. ⁠

It is understood that commercial activities such as e-commerce, advertising, and market operations are TikTok’s main sources of income. The data, content security and other businesses that the new joint venture is responsible for are non-profit in nature and have high operating costs. In order to ensure the operation of the joint venture, there will be commercially reasonable income sharing arrangements between the above entities.

In addition to the business distribution between the two companies, the board seats and equity structure of TikTok US Data Security Joint Venture Co., Ltd. are also the same as previously disclosed.

TikTok’s internal letter shows that ByteDance and TikTok have signed agreements with three investors, including Oracle, Silver Lake and MGX. The above-mentioned new investors hold a total of 45% of the shares in the new joint venture; some existing investors of ByteDance and their related parties hold 30.1% of the shares, and ByteDance will retain 19.9% ​​of the shares. It is understood that Bytedance is still the largest single shareholder of the new joint venture. In addition, the new joint venture will be majority-owned by U.S. investors and governed by a new seven-member board of directors.