In a significant move to safeguard its operations in the United States, TikTok has finalized a joint venture agreement with a consortium of American investors. This strategic deal effectively allows the popular video-sharing app to continue serving its massive user base in the US and avoid a potential ban that had been looming over its Chinese ownership.
The Structure of the Deal
According to an internal memo from TikTok CEO Shou Chew, the new US joint venture will be established with major investments from tech giant Oracle, investment firm Silver Lake, and Abu Dhabi-based MGX. Oracle's executive chairman, Larry Ellison, a known ally of former US President Donald Trump, is a key figure in the arrangement. The venture will hold exclusive responsibility for critical areas concerning American users, including data protection, algorithm security, content moderation, and software assurance.
The ownership breakdown reveals that the consortium of new investors—Oracle, Silver Lake, and MGX—will collectively hold 50% of the venture, with each owning 15%. Affiliates of existing ByteDance investors will own just over 30%, while ByteDance itself will retain close to 20%. This latter figure represents the maximum ownership permitted for a Chinese company under the terms of the US law that prompted the action.
Background and Political Pressure
This agreement is a direct response to legislation passed under President Joe Biden, which compelled ByteDance to divest TikTok's US operations or face a ban in its largest market. US policymakers have long expressed concerns that the Chinese government could potentially access data from the app's more than 170 million American users or influence content through its algorithm.
Former President Donald Trump, who initially pushed for action against TikTok, delayed enforcement through executive orders, with the latest deadline extending into January. The deal largely confirms a preliminary announcement made by the White House in September 2024. At that time, Trump remarked to reporters, "If I could make it 100 percent MAGA I would, but it's not going to work out that way unfortunately," while acknowledging Ellison's pivotal role.
Implications for ByteDance and the Road Ahead
For ByteDance, TikTok's parent company, this compromise is seen as a victory. Keeping the lucrative US market accessible is a crucial outcome. Chinese tech analyst Li Chengdong noted that settling this protracted issue allows ByteDance to refocus its energies on new ventures, such as artificial intelligence projects, and could pave the way for a future initial public offering (IPO).
However, experts caution that the deal does not guarantee an entirely smooth path forward. Zhang Yi of iiMedia Research warned that US regulators could still leverage their power to impose further demands on TikTok. The agreement has a closing date of January 22, and CEO Shou Chew acknowledged that more work remains to be done before finalization. Meanwhile, China's foreign ministry reiterated its consistent position on the matter without directly commenting on the deal.
