Key Points
- ByteDance finalized a deal spinning out TikTok’s U.S. operations to a group of American investors, avoiding a nationwide ban.
- Non-Chinese investors will control over 80 percent of the new U.S. entity, with ByteDance retaining a minority stake.
- The arrangement shifts U.S. data control and operations domestically to address national security concerns.
ByteDance, the China-based parent company of popular video sharing app TikTok, says it has finalized a deal with a group of American investors to spin out its U.S.-based operations.
The deal will allow ByteDance to resolve security concerns over the popular app and avoid a ban in American app stores.
Under the agreement, ByteDance, TikTok’s China-based parent, will retain a 19.9 percent stake in a newly formed entity called TikTok USDS Joint Venture LLC. Control of the U.S. business will shift to a consortium of non-Chinese investors led by Oracle, Emirati-backed investment firm MGX and U.S. private equity firm Silver Lake.
Each of those firms will hold approximately 15 percent of the joint venture, with additional stakes held by affiliates of existing ByteDance investors and the personal investment firm of Michael Dell.
TikTok said the investor group will collectively own more than 80 percent of the new venture. Adam Presser, TikTok’s former head of operations who previously led efforts to localize U.S. user data, has been named Chief Executive Officer of the U.S. entity. Will Farrell, who oversaw privacy and security initiatives tied to the separation, will serve as Chief Security Officer.
The new joint venture will assume responsibility for TikTok’s U.S. user data, core operations and content moderation for American users. Oracle will oversee storage of U.S. user data within its domestic cloud infrastructure, while the U.S. entity will retrain, test and update TikTok’s recommendation algorithm using U.S. user data. The algorithm will initially continue to be licensed from ByteDance, a structure the company said is intended to preserve interoperability with the global platform while complying with U.S. law.
TikTok said the changes are designed to address concerns that the Chinese government could compel ByteDance to access U.S. user data or influence the app’s recommendation system. U.S. officials had argued that such risks justified legislation requiring TikTok to either divest from ByteDance or face a nationwide ban. That law, signed in 2024 by then-President Joe Biden, prohibited cooperation with ByteDance on the operation of a content recommendation algorithm.
The issue first emerged during the first term of President Donald Trump, who sought to ban the app and later delayed enforcement of the divestiture requirement while negotiations continued. Trump approved the current structure last fall as a “qualified divestiture” and set a January 23 deadline to complete the transaction.
The deal allows TikTok to continue operating for its more than 200 million U.S. users, many of whom rely on the app for entertainment, commerce and news distribution. TikTok said American users will still be able to interact with global users, and that day-to-day functionality is unlikely to change materially, though the recommendation algorithm may evolve as the U.S. entity assumes greater control.
The Chinese government has not publicly commented on the completed deal, which had previously been entangled in broader U.S.-China trade negotiations.
