China’s ByteDance, the owner of TikTok, has signed binding agreements with US and international investors covering the majority of the platform’s operations in the United States, TikTok chief executive Shou Zi Chew told employees in an internal memo.
Under the deal, 50 per cent of a newly created joint venture will be held by an investment consortium that includes Oracle, Silver Lake and Abu Dhabi-based investment firm MGX. The transaction is expected to be completed on January 22, bringing to an end years of efforts by Washington to force ByteDance to divest TikTok’s US business on national security grounds.
Ownership structure and terms
According to the memo, ByteDance will retain a 19.9 per cent stake in the venture. Oracle, Silver Lake and MGX will each hold 15 per cent, while the remaining 30.1 per cent will be owned by affiliated entities linked to ByteDance’s existing investors.
The agreement broadly follows a framework presented in September, when US President Donald Trump delayed the enforcement of legislation that would have banned the app unless its US operations were sold.
In its message to staff, TikTok said the deal would allow “more than 170 million Americans to continue discovering a world of unlimited possibilities, as part of a vital global community”.
Role of Oracle and security concerns
The White House has previously indicated that Oracle, co-founded by Trump supporter Larry Ellison, would be responsible for licensing TikTok’s recommendation algorithm as part of the arrangement. The deal was finalised after a series of delays.
In April 2024, under President Joe Biden, the US Congress passed legislation mandating a ban on TikTok on national security grounds unless it was sold. The law was due to take effect on January 20, 2025, but its implementation was repeatedly postponed by Trump as his administration worked on the revised ownership structure.
Trump said in September that he had spoken by phone with Chinese President Xi Jinping, who, according to Trump, gave the green light to the deal. Despite a meeting between the two leaders in October, the platform’s future remained uncertain amid ongoing US-China tensions over trade and broader geopolitical issues.
TikTok as a geopolitical bargaining chip
“TIkTok has become a bargaining chip in the broader US-China relationship,” said Alvin Graylin, a lecturer at MIT. He noted that the recent easing of tensions makes Beijing’s approval less a concession and more a managed de-escalation, allowing both sides to present the outcome domestically as a political win.
Criticism and user concerns
The agreement has drawn criticism from Democratic Senator Ron Wyden of Oregon, who argued that it does not meaningfully protect the privacy of American users. Under the terms, TikTok’s recommendation algorithm will be retrained using US user data to ensure content feeds are not influenced by external actors. “It is not clear that this makes the algorithm more secure,” Wyden said.
Some platform users have also expressed reservations. Small business owner Tiffany Cianci, who has more than 300,000 followers on TikTok, said she hopes the new investors will preserve the platform’s existing environment for creators and small businesses. She described TikTok as a crucial promotional tool, offering more favourable revenue-sharing conditions than rival platforms.
TikTok says more than seven million small businesses in the United States use the app to promote their products and services.
Source: BBC