In a major development, the popular video-sharing platform TikTok has successfully navigated away from a potential shutdown in the United States. The company has finalized a joint venture agreement with a consortium of prominent investors, a move designed to address longstanding national security concerns raised by U.S. lawmakers.
The Structure of the Deal
According to an internal memo from TikTok's Chief Executive, Shou Chew, the platform and its Chinese parent company, ByteDance, have agreed to establish a new entity based in the United States. This new venture will have primary responsibility for safeguarding American user data and content.
The ownership of the new U.S. venture will be split, with a consortium of new investors taking a 50% stake. Technology giant Oracle, investment firm Silver Lake, and Abu Dhabi-based MGX will each hold 15% shares. Affiliates of existing ByteDance investors will control just over 30%, while ByteDance itself will retain slightly under 20%. This level is the maximum ownership permitted for a Chinese company under current U.S. law.
Chew emphasized that the U.S. joint venture will have the "exclusive right and authority" to ensure the security of content, software, and data for American users. Its mandates will include U.S. data protection, algorithm security, content moderation, and software assurance.
Ending a Prolonged Political Standoff
This agreement brings closure to a tense political battle over TikTok's future in its largest market, where it boasts over 170 million users. The deal is a direct response to legislation passed under former President Joe Biden, which required ByteDance to divest TikTok's U.S. operations or face a ban.
U.S. officials have consistently expressed fears that the Chinese government could potentially access American user data or manipulate public opinion through the app's powerful algorithm. Former President Donald Trump, who initially pushed for restrictions, later delayed enforcement through executive orders, most recently extending the deadline into January.
The arrangement largely confirms a White House announcement from September 2024, which stated that a new venture meeting the law's requirements had been agreed upon. Oracle's Executive Chairman, Larry Ellison—a known ally of Donald Trump—was publicly named as a central figure in the deal by Trump himself.
Implications and Reactions
While the deal is set for a planned closing on January 22, Chew noted that significant work remains to finalize the arrangement. Under the terms, TikTok Global's U.S. entities will oversee global product interoperability and key commercial operations like e-commerce and advertising.
Analysts have described the outcome as a strategic compromise. "Keeping the U.S. operation live is itself a victory for ByteDance," said Li Chengdong, founder of Chinese tech consultancy Dolphin. He added that resolving this issue allows ByteDance to concentrate on other priorities, including artificial intelligence projects and a potential future public listing.
However, some caution remains. Zhang Yi of research firm iiMedia warned that the U.S. market is still "of paramount importance to TikTok," but regulatory challenges could persist, with U.S. authorities possibly leveraging their power to impose further demands on the platform.
China's foreign ministry did not comment directly on the reported agreement, with spokesman Guo Jiakun only reiterating that China's position on the TikTok issue is "consistent and clear." ByteDance did not provide an immediate comment on the deal's announcement.
