SAN FRANCISCO– TikTok has signed deals with three major investors – Oracle, Silver Lake and MGX – to form a new TikTok US joint venture, ensuring that the popular social video platform can continue to operate in the United States.
The deal is expected to close on Jan. 22, according to an internal memo seen by The Associated Press. In the communication, CEO Shou Zi Chew confirmed to employees that ByteDance and TikTok have signed the binding agreements with the consortium.
Half of the new US joint venture TikTok will be owned by a group of investors, including Oracle, Silver Lake and Emirati investment firm MGX, who will each hold a 15% stake. 19.9% of the new app will be owned by ByteDance itself, and another 30.1% will be owned by subsidiaries of existing ByteDance investors, according to the memo.
The U.S. company will have a new board of directors made up of seven predominantly American members, the memo said. It will also be subject to conditions that “protect Americans’ data and U.S. national security.”
US user data will be stored locally in a system managed by Oracle.
TikTok’s algorithm — the secret sauce that powers its addictive video feed — will be retrained on U.S. user data to “ensure that the content feed is free from outside manipulation,” the memo says. The US company will also oversee content moderation and policies within the country.
U.S. officials have previously warned that ByteDance’s algorithm is vulnerable to manipulation by Chinese authorities, who can use it to shape the platform’s content in ways that are difficult to detect.
The algorithm has been a central issue in the debate over TikTok’s security. China previously argued that the algorithm should remain under Chinese control under the law. But U.S. regulations passed with bipartisan support stipulate that any divestment from TikTok must mean the platform cuts ties — particularly the algorithm — with ByteDance.
The deal marks the end of years of uncertainty over the fate of the popular video-sharing platform in the United States. After large bipartisan majorities in Congress passed – and President Joe Biden signed – legislation that would ban TikTok in the United States if it did not find a new owner in place of China’s ByteDance, the platform was expected to disappear by the January 2025 deadline. For several hours, that was the case. But on his first day in office, President Donald Trump signed an executive order to keep the company operating while his administration tries to reach a deal to sell the company.
Three more executive orders followed, as Trump, without a clear legal basis, continued to extend the deadline for a deal with TikTok. The second took place in April, when White House officials thought they were close to reaching a deal to turn TikTok into a new U.S.-owned company that collapsed after China withdrew following Trump’s tariff announcement. The third took place in June, then another in September, which Trump said would allow TikTok to continue operating in the United States in a way that addresses national security concerns.
TikTok has over 170 million users in the United States
