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TikTok has struck a deal with American investors, including Oracle and Silver Lake, to form a new US entity, averting a federal ban. This move ensures the app's operation for 170 million users by addressing national security concerns. Oracle will manage data security and algorithm oversight, with a majority-American board in charge of content.
TikTok has secured a rescue deal with American investors, signing binding agreements to create a new US entity that keeps the wildly popular app operational while satisfying national security requirements.
The transaction, set to close January 22, comes just two days before a federal ban would have forced TikTok offline for its 170 million American users.CEO Shou Zi Chew announced the agreement in an internal memo, confirming partnerships with Oracle Corporation, investment firm Silver Lake, and Abu Dhabi's state fund MGX. Together, these managing investors will control 45% of the new joint venture, with another 5% going to unnamed new investors.
Existing ByteDance investor affiliates hold 30.1%, while ByteDance itself retains just 19.9%.
Oracle takes control of data security and algorithm oversight
The restructured TikTok will operate under a seven-member, majority-American board with final authority over content moderation and policy decisions within the United States. Oracle assumes responsibility as the "trusted security partner," storing all sensitive US user data in American cloud servers while auditing compliance with national security terms.
Critically, TikTok's prized recommendation algorithm—the engine behind its addictive content feed—will be retrained exclusively on US user data to eliminate potential foreign manipulation. Oracle will oversee this process and validate ongoing compliance, though industry observers note questions remain about whether the algorithm has been fully transferred or merely licensed from ByteDance.
Deal resolves years of regulatory uncertainty over Chinese ownership
The agreement caps more than six years of questions about TikTok's future in the United States, driven by concerns that Beijing could access Americans' sensitive data or use the platform to spread propaganda. Congress passed legislation in April 2024 requiring ByteDance to divest its US operations or face prohibition, a law the Supreme Court upheld in January.The deal marks a significant expansion for Oracle beyond traditional enterprise software, positioning the company at the center of one of the world's most influential social media platforms.
English (US) ·