What's Happening?
Hogan Lovells has played a pivotal role in advising Oracle Corporation in the establishment of a new US entity for TikTok. This move comes as part of a strategic partnership involving Oracle, private equity
firm Silver Lake Management LLC, and Abu Dhabi investment company MGX, which together will control 50% of the new TikTok US entity. Existing ByteDance investors will hold 30.1%, while ByteDance itself retains 19.9%. The new entity is tasked with moderating content and safeguarding US user data, addressing longstanding national security concerns that have surrounded TikTok's operations in the United States. The legal team from Hogan Lovells, led by partners Keith Flaum and Jalpit Amin, has previously guided Oracle in significant transactions, including its acquisition of Cerner Corp. for $28.3 billion. Adam Presser, formerly TikTok's head of operations, trust, and safety, will serve as CEO of the American venture.
Why It's Important?
The establishment of a US-based entity for TikTok is a significant development in the ongoing saga of the app's operations in the United States, which have been under scrutiny due to national security concerns. This move is seen as a compromise to address these concerns while allowing TikTok to continue its operations in the US market. The involvement of major US and international investors in the new entity underscores the strategic importance of TikTok as a digital platform. For Oracle, this partnership represents a significant expansion into the social media space, potentially enhancing its data management and cloud services capabilities. The deal also highlights the increasing intersection of technology, national security, and international business, as companies navigate complex regulatory environments.
What's Next?
With the new entity in place, TikTok's operations in the US are expected to stabilize, allowing the company to focus on growth and innovation without the looming threat of a shutdown. The new leadership under Adam Presser will likely prioritize compliance with US regulations and the protection of user data. Stakeholders, including Oracle and its partners, will be closely monitoring the entity's performance and regulatory compliance. Additionally, the broader tech industry will be watching to see how this model of foreign-owned companies creating US entities to address security concerns might be applied in future cases.
