TikTok signs deal to house US operations in new joint venture with Oracle, Silver Lake & MGX
ByteDance’s TikTok has signed a deal to place its US operations into a new joint venture, TikTok USDS Joint Venture LLC, CEO Shou Zi Chew said in a memo to employees, adding that the deals have been completed with three managing investors – Oracle, Silver Lake and Abu Dhabi-based MGX. axios.
The new entity, to be called TikTok USDS Joint Venture LLC, will officially assume responsibility for TikTok’s U.S. business following a deal scheduled to close on Jan. 22, according to an internal memo sent to employees by CEO Shou Zi Chew.
What is the structure of TikTok and the USA’s new joint venture?
Under the agreement, a consortium of new investors comprising Oracle, Silver Lake and Abu Dhabi-based MGX will jointly own 50 percent of the U.S. joint venture, with the three firms each holding a 15 percent stake. Additionally, 30.1% will be held by affiliates of existing ByteDance investors, while TikTok’s China-based parent company ByteDance will retain a 19.9% stake.
Chew said the new entity would be “majority-owned by American investors, governed by a new seven-member board of directors composed mostly of Americans, and subject to terms that protect Americans’ data and U.S. national security.”
Why is TikTok’s US deal important?
The transaction addresses the requirements of U.S. national security legislation upheld by the Supreme Court in January, which requires ByteDance to divest TikTok’s U.S. operations or face an effective ban. In September, President Donald Trump signed an executive order approving a framework of agreements that would allow TikTok to continue operating in the United States, overriding a law signed by former President Joe Biden.
The deal is thought to put an end to a protracted political and legal saga that began in 2020 when Trump first issued an executive order demanding the sale of TikTok’s US business. Congress then passed a law in 2024 that threatened a nationwide ban if the app wasn’t sold to local owners.
Who will control TikTok’s data and security in the US?
According to the statement, the US joint venture will take responsibility for protecting US user data, securing TikTok’s recommendation algorithm, content moderation and software assurance. Chew said the organization “will have the exclusive right and authority to provide assurance that content, software and data for American users is secure.”
Oracle will play a central role beyond its investment. The tech firm will act as the joint venture’s “trusted security partner” and will be tasked with auditing and verifying compliance with “agreed National Security Requirements.” Sensitive US data will be stored only in Oracle’s US-based cloud computing data centers, Chew wrote.
How will the TikTok algorithm be handled in the US?
A key feature of the deal is TikTok’s plan to retrain its core recommendation algorithm using US user data. The new unit will be responsible for retraining the system “to ensure that the flow of content is free from outside manipulation,” the statement says; It’s a move aimed at assuaging longstanding concerns among U.S. lawmakers about foreign influence.
What’s next for the TikTok US deal?
Once the deal is completed, TikTok’s US operations will come under American oversight and the platform will be allowed to continue serving its millions of users across the country.
