TikTok has finalized an agreement to transfer significant control of its U.S. operations to American investors, concluding years of conflict with the federal government regarding national security concerns.
Key Points
- The formation of a new U.S. joint venture, TikTok USDS Joint Venture LLC, will see Oracle, Silver Lake, and MGX owning 45%, while ByteDance retains approximately 20%.
- This partnership will oversee application management, data privacy, algorithms, content moderation, and security audits, with Oracle designated as the primary security partner.
- The agreement is set to close on January 22, 2026, aligning with the specifics outlined in a Trump executive order from September.
- This marks the end of efforts to separate TikTok’s U.S. operations from its Chinese parent company, ByteDance.
ByteDance, the parent company of TikTok, circulated an internal memo from CEO Shou Zi Chew detailing the new plan. A joint venture will soon be established to manage TikTok’s U.S. operations, with key American stakeholders including Oracle, private equity firm Silver Lake, and Abu Dhabi-based AI firm MGX.
This new arrangement will place U.S. investors in charge of safeguarding American user data and overseeing essential areas such as algorithm management, content moderation, and security risk assessment. An independent auditor will monitor these operations, with Oracle expected to lead after finalization.
The timing aligns with earlier pressures from President Trump, whose executive order allowed for the sale of TikTok’s U.S. business instead of an outright ban. Until recently, ByteDance had provided few specifics beyond its commitment to adhere to U.S. regulations and maintain the app for American users.
STATEMENT FROM TIKTOK:
In coordination with our service providers, TikTok is working on restoring services. We thank President Trump for offering the essential clarity and assurance that our providers would not face penalties for delivering TikTok to over 170…
— TikTok Policy (@TikTokPolicy) January 19, 2025
The primary concern of the U.S. government was the potential for ByteDance to share American user data with China or allow the Chinese government to influence content within the app. This agreement seems to be a compromise to avoid a complete ban while still granting U.S. authorities increased oversight.
With TikTok boasting over 170 million users in the U.S., a shutdown would have adversely affected creators, small businesses, and regular users alike. All eyes are now on whether regulatory bodies will endorse this deal and how China will respond. If successful, it could influence how other foreign-owned apps are regulated moving forward.
