TikTok owners signed venture deal to avoid US ban

TikTok’s Chinese owner ByteDance has signed a binding agreement with American and global investors to operate in the United States, TikTok’s boss told employees Thursday.

Half of the joint venture will be owned by a group of investors including Oracle, Silver Lake and Emirati investment firm MGX, according to a memo sent by CEO Shou Zi Chew.

The deal, scheduled to close on January 22, will end years of efforts by the United States to force ByteDance to sell its U.S. operations, citing national security concerns.

This is consistent with a deal revealed in September, when US President Donald Trump delayed enacting a law that would ban apps unless they sell.

In a note, TikTok said the deal “will allow more than 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community.”

Under the deal, ByteDance will hold a 19.9% ​​stake in the business, while Oracle, Silver Lake and Abu Dhabi-based MGX will each hold 15%.

Another 30.1% will be held by affiliates of existing ByteDance investors, according to the memo.

The White House previously said that Oracle, co-founded by Trump supporter Larry Ellison, would license TikTok’s recommendation algorithm as part of the deal.

The deal took place after a series of delays.

In April 2024, during President Joe Biden’s administration, the U.S. Congress passed a bill banning apps from being sold unless they are sold, citing national security concerns.

The law was scheduled to take effect on January 20, 2025, but was delayed several times by President Trump while his administration worked out a deal to transfer ownership.

President Trump spoke on the phone with Chinese President Xi Jinping in September and said Xi Jinping had advanced the agreement.

Even after the two leaders met in person last October, the future of the platform remained unclear.

Ongoing tensions between the two countries over trade and other issues have clouded the app’s fate.

“TikTok has become a bargaining chip in the broader U.S.-China relationship,” said Alvin Graylin, a lecturer at MIT.

“With the recent easing of tensions, China’s approval of structural and algorithmic licenses now looks more like a coordinated de-escalation than a capitulation, allowing both capitals to claim victory at home.”

The White House referred TikTok to the BBC for comment.

Oracle and Silver Lake declined to comment. The BBC has contacted MGX for comment.

The deal drew criticism from Sen. Ron Wyden, a Democrat from Oregon, who said it would not do “a job of protecting the privacy of American users.”

Under the terms, TikTok’s recommendation algorithm is set to be retrained on US user data to ensure the feed is free from external manipulation.

“It’s not clear whether TikTok’s algorithms will be left in safer hands,” Sen Wyden said.

He opposed the 2024 law and was one of several U.S. lawmakers who lobbied to extend the TikTok deadline in January to give Congress more time to mitigate the threat from China.

Some users also expressed a cautious stance about the prospects of new investors.

Tiffany Cianci, a small business owner who has more than 300,000 followers and nearly 4 million likes on the platform, said she hopes incoming investors will maintain the same user experience for entrepreneurs like her.

“I want small business owners to be protected,” Cianci said.

TikTok says more than 7 million small businesses sell products and services through TikTok in the United States.

“We reserve judgment on whether we saved the app for those small businesses,” she added.

Mr. Cianci said he chose TikTok for the promotion because the platform offers profit sharing on more favorable terms than those offered by competitors such as Meta.

Over the past year, Mr. Cianci has been active in organizing protests in Washington and TikTok to protect the app.