TikTok avoids nationwide ban with long-awaited US deal
TikTok and its Chinese parent ByteDance Ltd. have finalized a long-anticipated agreement to transfer segments of its US operations to American investors, ensuring the popular video app’s continued presence in the US and circumventing a nationwide ban. The social media company has officially formed a US entity, backed by three managing investors: Oracle Corp., the private equity firm Silver Lake Management LLC, and the Abu Dhabi-based investment company MGX. TikTok Chief Executive Officer Shou Chew — who will continue to oversee ByteDance’s most valuable asset globally — secures a position on the board. Adam Presser, his lieutenant, will lead the American venture as CEO. A TikTok sale marks the end of a prolonged geopolitical and regulatory struggle that has, for five years, posed the risk of shutting down TikTok in the US due to national security issues. In 2024, Congress enacted legislation aimed at banning the app unless ByteDance divested TikTok, highlighting worries that the Chinese government might exploit access to US user data or leverage the app to promote narratives favored by Beijing. TikTok has sustained that neither has occurred.
A deal was originally set to be finalized by January 2025 to prevent a ban; however, US President Donald Trump extended the deadline multiple times to provide TikTok with additional time. The resolution, years after a potential ban was first discussed, represents a significant victory for small businesses, major brands, and content creators whose livelihoods are tied to TikTok, as well as for the approximately 200 million US users who engage with the app each month for news and entertainment. Under the arrangement — originally announced by the Trump administration in September — new investors including Oracle, Silver Lake, and MGX will own 50 percent of the new TikTok US entity. Current investors of ByteDance will possess 30.1 percent of the newly formed company, while ByteDance itself will retain a 19.9 percent stake, in compliance with legal requirements.
The newly established entity will oversee content moderation on TikTok and safeguard the data of users in the United States. A new, seven-member majority-American board will govern it. Oracle, a longstanding partner of TikTok in cloud computing, will act as a security guard responsible for ensuring that TikTok complies with legal regulations. Nevertheless, critics have contended that the arrangement fails to sufficiently comply with the US national security law enacted in 2024 during the Biden administration, which mandated a spinoff. It remains uncertain whether any of these critics will take action against the deal. The law mandates that ByteDance must not maintain any operational ties with US TikTok. TikTok asserts that its joint venture has been formed in accordance with Trump’s September executive order.
The proposal from the White House permits ByteDance to lease a version of its content algorithm to the upcoming US TikTok entity, with plans to retrain the new algorithm using data from US users. ByteDance is anticipated to retain control over significant aspects of its US TikTok operations, including its advertising division and the rapidly expanding e-commerce segment, TikTok Shop.
