Firms guide on ByteDance-US JV to secure TikTok operations

ByteDance has reached an agreement with American investors to establish a US joint venture focused on data security, enabling TikTok’s continued operations in the country. Firms including Simpson Thacher, Hogan Lovells, Paul Hastings and Kirkland & Ellis advised on the deal.

In a 23 January announcement, ByteDance said it had established TikTok USDS Joint Venture, which was majority-owned by US investors. The joint venture provides data protection, algorithm security, content moderation and software assurance services, supporting the continued use of TikTok by more than 200 million Americans and 7.5 million businesses.

The joint venture was intended to address data security concerns over the use of TikTok in America, adding to China-US geopolitical tensions since 2019.

With a 19.9% stake, ByteDance is the joint venture’s largest shareholder. Major investors Silver Lake, Oracle and UAE-based investment fund MGX each hold a 15% interest. Other investors include Dell Family Office, the investment firm of the founder and chairman of Dell Technologies, as well as Vastmere and Alpha Wave Partners.

Simpson Thacher counselled ByteDance, with the team including Beijing-based M&A partners Wang Yang and Min Jie, as well as US-based M&A partners Eric Swedenburg, Atif Azher, Mark Myott and Sherry Shen. Capital markets partner William Brentani, IP partners Lori Lesser and Caroline Geiger, banking and credit partner Dorothy Hector, tax partner Russell Light, as well as regulatory partners Mark Skerry, Josh Buckland, Karen Kazmerzak and Jennifer Ho were also on the team.

Paul Hastings advised Silver Lake and MGX, with M&A department co-chair Eric Schiele, partner Jon Kubek and of counsel Vanessa Tarpos leading the team.

Hogan Lovells acted for Oracle, led by partners Keith Flaum and Jalpit Amin.

Kirkland advised an unnamed investor in the deal. The team included: corporate partners Joey Chau, Leo Zhou, Wang Jiayi and Ieuan Adrian List; technology and IP transactions partners Wang Min, Jessie Perlman and Jeffrey Seroogy; international trade and national security partners Ivan Schlager and Lucille Hague; tax partners Mike Carew and Allison Bray; employment and labour partner Jackson Phinney; employee benefits partners Maureen O’Brien, Matthew Antinossi and Chris Chase; executive compensation partner Lauren Cates; antitrust and competition partners Alasdair Balfour, Matthew Sinclair-Thomson, Rebekah Scherr and Anoushka William, and the director of M&A clearance, Kurt Wunderlich.

The joint venture’s CEO is Adam Presser – who previously served as TikTok’s head of operations, trust and safety – and is a close lieutenant of TikTok CEO Shou Chew. Chew is one of the joint venture’s seven board members and is responsible for global business and strategy.