TikTok’s odyssey to legal status in the U.S. is about to end.
Late Thursday, TikTok CEO Shou Zi Chew informed employees that ByteDance has signed binding agreements to create a new U.S. joint venture, according to a memo obtained by the Associated Press, Reuters, Axios, and others.
The agreement establishes TikTok USDS Joint Venture LLC with three managing investors — Oracle Corp., private equity firm Silver Lake, and Abu Dhabi’s state-owned MGX — each holding 15% stakes. The deal is scheduled to close Jan. 22, just days after the one-year anniversary of when federal divestment legislation took effect.
Under the arrangement, the U.S. joint venture will be 50% owned by the consortium of new investors, 30.1% held by existing ByteDance investors, and 19.9% retained by ByteDance itself. This structure brings the company into compliance with U.S. law prohibiting distribution of apps more than 20% owned by a “foreign adversary.”
The bipartisan legislation, which passed with overwhelming support last year amid national security concerns about ByteDance’s ties to China, went into effect Jan. 19, 2025. Lawmakers feared the Chinese-owned company could spy on Americans or manipulate content. However, President Trump issued five executive orders delaying enforcement while the administration brokered the current deal.
The new entity will operate with a seven-member board of directors, six of whom will be American, with ByteDance controlling one seat. According to Chew’s memo, the venture will have “authority over U.S. data protection, algorithm security, content moderation and software assurance.”
A critical component involves TikTok’s content recommendation algorithm. The joint venture will be responsible for “retraining the content-recommendation algorithm on U.S. user data to ensure the content feed is free from outside manipulation,” Chew wrote. U.S. user data will be hosted on servers run by Oracle, which already provides computing services for TikTok’s American operations.
“Algorithms are no longer a feature of the business. They are the business. Housing TikTok’s U.S. operations in a new entity while licensing the algorithm from ByteDance shows where the real power sits,” Derek Perry, chief technology officer at Sparq, said in an email “The code is the moat. Control the recommendation engine and you control influence, growth, and risk.”
“For any company operating in regulated markets or handling sensitive data, that should ring alarm bells,” he said. “If your core technology lives overseas, you don’t truly control your platform. You’re operating on borrowed ground.”
While the U.S. venture handles data protection and content moderation, ByteDance will continue managing revenue, with an undisclosed portion shared with the American entity. Vice President JD Vance indicated in September that the venture is valued at approximately $14 billion, though the exact investment amounts from Oracle, Silver Lake, and MGX have not been disclosed.
The deal encompasses not only TikTok but also ByteDance’s Lemon8 and CapCut applications, according to Trump’s September executive order that approved the joint venture formation. Current ByteDance investors including Susquehanna International, KKR, and General Atlantic are also part of the ownership group.
Trump’s support for TikTok marks a reversal from his first administration, when he unsuccessfully attempted to ban the app over similar security concerns. After winning the 2024 election, Trump said he has “a warm spot in my heart for TikTok,” crediting the platform with helping drive support among young voters.
In his memo, Chew thanked employees for their dedication during the prolonged uncertainty. “Your efforts keep us operating at the highest level and will ensure that TikTok continues to grow and thrive in the U.S. and around the world,” he wrote.
Marketing executives welcomed the resolution. “This sale is not only keeping TikTok in the U.S., it’s keeping the livelihoods of many Americans secured,” said Ido Mart, chief marketing officer at Manychat, noting the platform’s importance to businesses and creators.
