In a significant move to secure its future in one of its largest markets, TikTok has finalised a crucial joint venture agreement. This deal is designed to address longstanding national security concerns in the United States and effectively neutralise the threat of an outright ban on the popular social media platform.
The Structure of the TikTok US Joint Venture
According to an internal company memo reported by major US media outlets including Bloomberg and Axios, TikTok CEO Shou Chew informed employees of the new arrangement. The agreement involves TikTok's Chinese parent company, ByteDance, partnering with a consortium of major investors to create a new US-based entity.
The key investors named in the deal are Oracle, the investment firm Silver Lake, and Abu Dhabi's MGX. This structure is a direct response to a law passed under President Joe Biden, which mandated that ByteDance either sell TikTok's US operations or face a prohibition in the American market.
Ownership Details and Political Connections
The ownership breakdown of the new venture is critical. Shou Chew stated that approximately one-third will be held by existing ByteDance investors. ByteDance itself will retain nearly 20 percent ownership, which is reported to be the maximum allowable for a Chinese company under the terms of the US law.
A notable figure in this arrangement is Oracle's executive chairman and founder, Larry Ellison. Ellison is a longtime ally of US President Donald Trump, who has repeatedly delayed enforcement of the ban through executive orders, most recently extending the deadline until January 2025.
The memo marks the first confirmation that TikTok has formally signed onto the deal, which required approval from the Chinese government to proceed.
Addressing National Security and Operational Independence
For years, US policymakers from both major parties have expressed fears that the Chinese government could potentially access data from American TikTok users or influence content through the app's sophisticated algorithm. This joint venture is crafted to alleviate those concerns.
In the memo, Chew outlined how the new entity would function. "Upon the closing, the US joint venture... will operate as an independent entity with authority over US data protection, algorithm security, content moderation and software assurance," he wrote.
Meanwhile, separate US entities under "TikTok Global" will manage global product interoperability and commercial activities like e-commerce and advertising. The memo did not explicitly clarify if this unit would remain under ByteDance's ownership.
This agreement largely confirms an announcement made by the White House in September 2024, which stated that a new venture had been agreed upon with China and would satisfy the requirements of the law.
The deal not only preserves TikTok's massive presence in the US but also underscores the complex intersection of global technology, data sovereignty, and international politics. It represents a compromise solution in a high-stakes standoff that has lasted through multiple US administrations.
