TikTok strikes deal for US unit to avoid ban; Oracle to take control of security

TikTok has signed a joint venture deal with a group of investors that would allow the short-video platform to continue operating in the United States and avert a ban linked to its Chinese ownership, US media reported on Friday.

Citing an internal memo from TikTok Chief Executive Shou Chew, Axios reported that TikTok and its parent ByteDance had agreed to form a new US entity with Oracle, private equity firm Silver Lake and Abu Dhabi-based investment firm MGX as major investors.

The agreement, which is expected to close on January 22, would end years of uncertainty over TikTok’s future in the United States, where lawmakers and security officials have warned that the app’s Chinese ownership poses national security risks.

Under the deal, TikTok USDS Joint Venture LLC will be majority-owned by US and foreign investors outside China.

Oracle, Silver Lake and MGX will each hold a 15% stake, together owning 45% of the venture, according to the report.

ByteDance will retain a 19.9% stake, while affiliates of existing ByteDance investors will own another 30.1%.

The US venture will have a seven-member board with a majority of American directors and will operate as an independent entity with authority over US data protection, algorithm security, content moderation and software assurance, according to The Associated Press.

TikTok’s US unit will also be responsible for retraining its content recommendation algorithm using US user data to ensure the feed is free from outside manipulation.

Oracle will serve as the “trusted security partner” responsible for auditing and validating compliance with US national security requirements.

US officials have long argued that TikTok’s algorithm could be vulnerable to influence by Chinese authorities, a concern that has been central to the debate over the app’s future.

A bipartisan law signed last year by then-President Joe Biden required TikTok to divest from ByteDance or face a US ban by January 2025.

TikTok briefly went offline earlier this year after the deadline passed, before President Donald Trump, on his first day back in office, signed an executive order allowing the app to continue operating while negotiations over a sale proceeded.

Chew told employees that the deal would not affect the user or advertiser experience and that TikTok would continue to serve US users and global advertisers without disruption.

TikTok has more than 170 million users in the United States. About 43% of US adults under 30 regularly get news from the platform, according to a Pew Research Center report.