TikTok signs US joint venture deal to end ban threat
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The deal, set to close on Jan 22, would end years of efforts to force the app’s Chinese parent ByteDance to divest its US business over national security concerns.
PHOTO: REUTERS
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NEW YORK – TikTok’s long-delayed plan to separate from Chinese parent ByteDance was put in motion on Dec 18 when the hugely popular social media app said it was being bought by a group of buyers led by US tech giant Oracle.
TikTok chief executive Chew Shou Zi told employees that the company and ByteDance signed binding agreements to create a US joint venture majority-owned by American investors, according to an internal memo.
Mr Chew wrote that he was “pleased to share some great news” and said agreements with Oracle, US global private equity firm Silver Lake Management and Abu Dhabi-based investment company MGX have been signed.
The deal is expected to close on Jan 22, 2026, though Mr Chew added that “there’s more work to be done” before then.
Mr Chew’s memo did not mention China’s opinion on the transaction, which would wrest some – but not total – control of TikTok US from ByteDance.
Upon closing, the US joint venture will operate as an independent entity that will control data protection, content moderation and algorithm security in the country, Mr Chew told employees in the memo.
The new US entity will also be “governed by a new seven-member majority-American board of directors”, he added.
Oracle shares jumped nearly 6 per cent in after-hours trading on Dec 18 on the news.
The memo outlined a deal that matched what the White House announced in September, which was pending approval from China at the time and valued TikTok’s US operations at roughly US$14 billion (S$18 billion).
Under the arrangement, 50 per cent of the investors in TikTok US will be new, with Oracle, Silver Lake and MGX each gaining 15 per cent ownership; 30.1 per cent will be held by affiliates of certain existing investors of ByteDance; and 19.9 per cent will be retained by ByteDance.
The terms outlined in the CEO’s memo appear to leave the door open for ByteDance to potentially retain oversight of key parts of TikTok US, an app used by half the country.
Bloomberg News previously reported that the Chinese parent company would retain roughly 50 per cent of the profit from TikTok’s US operations.
ByteDance’s involvement has long been a sticking point in negotiations, and has led critics, including members of US President Donald Trump’s own political party, to argue that the arrangement the White House negotiated may not pass legal muster.
The national security law passed and signed under former president Joe Biden mandated that TikTok US and ByteDance have no operational relationship.
ByteDance’s coveted content algorithms are considered central to TikTok’s business.
Under the version of the deal recently outlined by the White House, ByteDance is expected to license its artificial intelligence recommendation technology to the newly created US TikTok entity, which will use the existing algorithm to retrain a new system on US data that is secured by Oracle, TikTok’s cloud partner.
Oracle’s role as a data security guard has also raised concerns. The arrangement mirrors an earlier TikTok-Oracle collaboration proposed years ago to the US government as a way to solve similar concerns about TikTok’s Chinese ownership. That team-up, called Project Texas, was ultimately rejected by the US government and deemed insufficient to address national security issues.
If finalised, the deal will remove a persistent issue in Beijing-Washington relations and signal progress in broader negotiations between the two countries, which have sparred on trade and other issues.
The White House had dominated disclosures about the proposed arrangement, which was mandated on national security grounds by a law signed in 2024 under the Biden administration.
US officials have expressed concern that TikTok is owned by a Chinese company, and are worried that Beijing could use the app to collect data about US citizens or push specific narratives to Americans via the app’s recommendation algorithm.
Under the law, the initial deadline for the sell-or-ban rule was this past January, but Mr Trump extended this deadline multiple times since re-entering office, most recently pushing it to January 2026.
For months, as the prospect of a ban under Mr Trump has become less and less likely, TikTok has been operating business as usual and further planting its flag as a dominant cultural force in the US.
It has been pushing aggressively into e-commerce and livestream shopping, including partnering with major American tech companies such as Amazon.
The same day that Mr Chew announced an agreement had been reached, TikTok held its first Oscars-style red carpet show, The TikTok Awards, in Los Angeles. BLOOMBERG
