Updates with additional lawmaker in paragraphs 1-2, 9
By David Shepardson
WASHINGTON, Jan 23 (Reuters) - Some U.S. lawmakers on Friday said a deal by TikTok's Chinese owner ByteDance to establish a majority American-owned joint venture to avoid a U.S. ban on the social media app needs scrutiny from Congress.
Representative Jack Moolenaar, the Republican chair of the House select committee on China, said the committee would conduct oversight of the deal finalized Thursday, adding China "cannot be allowed to weaponize an app to divide and weaken our country. Does this deal ensure China does not have influence over the algorithm? Can the parties involved assure Americans their data is secure? Those are questions that need to be answered."
Democratic Senator Ed Markey said the deal left many key questions unanswered.
"The White House has provided virtually no details about this agreement, including whether TikTok’s algorithm is truly free of Chinese influence. This lack of transparency reeks," Markey said. "Congress has a responsibility to investigate this deal, demand transparency, and ensure that any arrangement truly protects national security while keeping TikTok online.”
The White House and TikTok did not immediately comment on Markey's criticism. TikTok is used by more than 200 million Americans.
ByteDance said TikTok USDS Joint Venture LLC would secure U.S. user data, apps and algorithms through data privacy and cybersecurity measures. It disclosed few details about the divestiture.
The deal is a milestone for the social media firm after years of battles that began in August 2020, when President Donald Trump unsuccessfully tried to ban the app over national security concerns.
Trump opted not to enforce a law passed in April 2024 requiring ByteDance to sell its U.S. assets by the following January or face a ban - a measure upheld by the Supreme Court.
The top Democrat on the committee, Representative Ro Khanna, has previously sought to repeal the 2024 law and said the "deal is once again causing uncertainty among many creators."
The agreement provides for American and global investors to hold 80.1% of the venture while ByteDance will own 19.9%.
TikTok USDS JV's three managing investors - cloud computing giant Oracle, private equity group Silver Lake and Abu Dhabi-based investment firm MGX - will each hold 15%.
The Chinese Embassy in Washington said its "position on the TikTok issue has been consistent and clear", but did not address whether it had approved the deal.
Trump last year said the deal met the terms of divestiture requirements under the 2024 law. The White House in September said the venture would operate TikTok's U.S. app.
TikTok said investors in the venture included Dell Family Office - the investment firm of Dell Technologies founder Michael Dell - plus Vastmere Strategic Investments, Alpha Wave Partners, Revolution, Merritt Way, Via Nova, Virgo LI and NJJ Capital.
(Reporting by David Shepardson in Washington, Editing by Franklin Paul and Alex Richardson)
((Email David.Shepardson@thomsonreuters.com 202-579-6093))
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