TikTok Secures Its US Future by Creating New Joint Venture

TikTok has completed a deal to create a new U.S.-based joint venture, resolving years of uncertainty over whether the app would be banned in the United States.

The agreement establishes a majority American-owned entity designed to address national security concerns while allowing TikTok’s more than 200 million U.S. users to continue using the same app.

ByteDance, TikTok’s Chinese parent company, signed agreements with a group of major investors to form the new company, TikTok USDS Joint Venture LLC. The three managing investors — Oracle, Silver Lake, and Abu Dhabi-based MGX — will each hold 15% stakes.

Reuters reports additional investors include Dell Family Office and several private investment firms. American and global investors collectively will own 80.1% of the venture, while ByteDance will retain a 19.9% stake.

TikTok says the new entity will operate under safeguards intended to address U.S. security concerns. These include local storage of U.S. user data in systems run by Oracle, cybersecurity controls, software integrity measures, and oversight of content moderation.

The company says the arrangement is designed to provide “comprehensive data protections, algorithm security, content moderation and software assurances for U.S. users.”

The deal follows years of political and legal pressure. Concerns over TikTok’s Chinese ownership intensified in 2020, when then-President Donald Trump attempted to ban the app on national security grounds.

In 2024, Congress passed a law requiring ByteDance to divest TikTok’s U.S. operations or face a ban, a measure signed by President Joe Biden and later upheld by the Supreme Court.

TikTok briefly went dark ahead of the law’s January 2025 deadline, but upon returning to office, Trump issued an executive order keeping the app online while negotiations continued.

Trump praised the finalized agreement in posts on Truth Social. He says TikTok “will now be owned by a group of Great American Patriots and Investors, the Biggest in the World.” He also thanked China’s president, writing, “for working with us and, ultimately, approving the Deal. He could have gone the other way, but didn’t, and is appreciated for his decision.”

In a separate post, he says he hopes “that long into the future I will be remembered by those who use and love TikTok.”

One of the most sensitive elements of the agreement involves TikTok’s content recommendation algorithm, which has been at the center of U.S. security concerns. Under the deal, the algorithm will be retrained, tested, and updated using U.S. user data. It will be secured in Oracle’s U.S.-based cloud infrastructure. ByteDance will license the algorithm to the new U.S. entity for this purpose.

However, aspects of this arrangement may face scrutiny under the 2024 law, which prohibits “any cooperation with respect to the operation of a content recommendation algorithm” between ByteDance and a divested U.S. TikTok entity. How ByteDance’s ongoing licensing role will be interpreted under that restriction remains unclear.

“Who controls TikTok in the U.S. has a lot of sway over what Americans see on the app,” Anupam Chander, a professor of law and technology at Georgetown University, tells AP.

Image credits: Header photo licensed via Depositphotos.