TikTok signs deal to sell stakes of US subsidiary to investors

TikTok has apparently signed the agreement to sell the majority of stakes in its US subsidiary. This is according to an internal memo from TikTok CEO Shou Zi Chew to his employees. Through the sale, the Chinese video platform avoids a ban in the US. A law passed there last year on the forced sale of TikTok aims to prevent US citizens' data from being accessed by the Chinese government and to place the TikTok recommendation algorithm under the control of local companies. TikTok had legally challenged this but was unsuccessful.

Such an agreement ends the more than year-long dispute between the US government and the Chinese TikTok parent company, ByteDance. Even the previous Biden administration feared a threat to national security from the app if China gained access to TikTok's user data and profiles. The app has over 170 million users in the US. TikTok itself denied that the Chinese government can access the personal data of US users. However, the app's recommendation algorithm relies on some of this data.

Oracle and investment companies involved

The internal TikTok memo now confirms some details about the TikTok agreement that were already mentioned by the White House in September. For example, IT group Oracle, investment company Silver Lake, and the Abu Dhabi-based investment fund MGX will jointly acquire 45 percent of TikTok's US subsidiary, which will be named “TikTok USDS Joint Venture LLC.” in the future. About a third of this company will be held by existing ByteDance investors, while ByteDance itself will retain 20 percent, Axios writes.

The new TikTok joint venture will be responsible for US user data protection, algorithm security, content moderation, and software security. The recommendation algorithm will be retrained based on US user data to ensure that no external manipulation occurs. This algorithm influences which videos Americans see. Oracle, as a security partner, will be responsible for the review and compliance with national security conditions.

Agreement one and a half years after ban order

Although the law on the forced sale of TikTok was passed in April 2024, it only became effective in mid-January 2025 after ByteDance's lawsuit, when the Supreme Court confirmed the TikTok ban. This made TikTok Donald Trump's problem, who was sworn in as US President a few days later. Like his predecessor Joe Biden, Trump repeatedly postponed the enforcement of the ban to allow TikTok and ByteDance longer sales negotiations. Most recently in September, Trump gave TikTok more time in the US.

When asked by Reuters, Oracle declined to comment on the agreement, and the White House referred questions to TikTok. According to ByteDance, the TikTok deal is expected to be completed on January 22, 2026. It remains unclear how much investors will have to pay for their stake in the TikTok joint venture and how revenues will be divided in the future. Last fall, it was reported that 50 percent of US revenues will flow to ByteDance after the TikTok deal.

(fds)