TikTok Secures U.S. Partnership to Prevent Ban
In a significant move to align with U.S. regulations, TikTok has established a new U.S.-based entity for its operations. This announcement comes a year after a federal law mandated a potential ban on the app unless its parent company, ByteDance, divested its American operations. The formation of this joint venture was confirmed on Thursday, aiming to address national security concerns and protect user data.
TikTok’s New U.S. Joint Venture
The newly formed joint venture will be managed by U.S.-based investors, primarily Oracle and Silver Lake, alongside Abu Dhabi-based MGX. These firms will hold a combined 45% stake in the operation. Additional ownership includes:
- 35% from eight other investors, which includes the personal investment office of Dell CEO Michael Dell.
- 19.9% retained by ByteDance, just under the 20% limit imposed by U.S. law.
This structure aims to create a majority American-owned operation that emphasizes comprehensive data protections and algorithm security for users in the United States.
Legal Context and Government Involvement
This development follows the bipartisan law passed in 2024, which requires ByteDance to sever ties with TikTok’s U.S. operations to avoid penalties, including removal from app stores effective January 19, 2025. Despite the law, former President Trump issued directives to prevent penalties against tech companies hosting TikTok, allowing continued app availability.
According to a White House official, both the U.S. and China approved the deal that enables TikTok’s transition to U.S. ownership. The new structure mandates operational independence from ByteDance, thereby limiting any interaction regarding TikTok’s algorithm and user data.
Operational Changes and Future Assurance
Under the new arrangement, TikTok’s U.S. operations will focus on updating and testing the content recommendation algorithm using American user data. Regular source code reviews by Oracle will be conducted to ensure security. Notably, the U.S. version of TikTok will remain compatible with versions available worldwide, preserving access to global content.
Concerns and Congressional Oversight
While this venture appears promising, lawmakers express concerns regarding potential influences from the Chinese Communist Party (CCP) over the app’s algorithm. GOP Rep. John Moolenaar emphasized the need to address whether the deal fully prevents CCP influence and guarantees data security for American users.
| Stakeholder | Stake Ownership |
|---|---|
| Oracle & Silver Lake | 45% |
| Additional Investors (incl. Michael Dell’s office) | 35% |
| ByteDance | 19.9% |
Despite prior plans such as Project Texas, which proposed data storage and algorithm auditing to ease national security concerns, these efforts were deemed inadequate by U.S. officials. The complexity of TikTok’s source code, alongside the time required for Oracle’s oversight, raised significant alarms within the Justice Department.
A Path Forward for TikTok in the U.S.
As the new venture takes shape, Vice President JD Vance played a critical role in securing TikTok’s presence in the American market. He encouraged major tech companies to reintegrate the app into their stores after initial restrictions were imposed.
Rep. Ro Khanna also highlighted ongoing uncertainties faced by creators dependent on TikTok, reiterating the need for a balanced approach that ensures both data security and the stability of the creator economy.
The establishment of this U.S. entity represents a crucial step for TikTok, enabling the platform to operate within legal frameworks while striving to protect user data and national interests.
