TikTok’s U.S. business is set to be restructured under a new American-led company backed by Oracle, Silver Lake and Andreessen Horowitz, according to a report published on Tuesday.
The report, from the Wall Street Journal, says a framework of the deal was discussed during U.S.-China trade talks in Spain. The deal would give U.S. investors about 80 percent control of the new entity, with ByteDance’s Chinese shareholders reduced to just under 20 percent. The company would have an American-dominated board, including one director appointed by the U.S. government.
Oracle would continue managing TikTok’s U.S. user data at its Texas facilities. A new version of the app is also being developed for American users, with recommendation algorithms re-created and licensed from ByteDance. Industry executives say keeping the algorithm insulated from Chinese oversight has been a key sticking point, given its central role in TikTok’s success.
“Both sides have reached a basic consensus on resolving the TikTok issue,” Wang Jingtao, the Deputy Director of China’s top cyberspace regulator, said in Madrid. He added that China was open to licensing TikTok’s technology and entrusting U.S. data operations to Oracle.
President Donald Trump confirmed progress Tuesday, saying, “We’ve got a deal on TikTok. I’ve reached a deal with China. I’m going to speak to President Xi [Jinping] on Friday to confirm everything. These are very big companies that want to buy it.”
The deal remains subject to final review and could change. A new executive order extends TikTok’s deadline to comply with U.S. law until December 16. If completed, the agreement would end years of uncertainty around TikTok’s American operations, which serve more than 170 million users.
The agreement is rooted in legislation signed last year that requires ByteDance to divest its American operations for TikTok under threat of banishment from app stores controlled by Apple, Google, Microsoft and others. Federal legislators cited unspecified national security concerns as justification for the ban, which was supported by Trump during his first term in office.
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