WASHINGTON, February 29, 2024 — TikTok has reached a deal to continue operating in the United States, the company announced Thursday, averting a potential ban that loomed over the popular short-form video platform for years.
The agreement, years in the making, aims to address U.S. national security concerns surrounding TikTok’s Chinese ownership.
- The deal centers around licensing TikTok’s algorithm to a new U.S.-based entity.
- Oracle will be responsible for securing U.S. user data and retraining the algorithm.
- ByteDance, TikTok’s parent company, will retain a minority stake in the U.S. business.
- A majority-American board of directors will govern the new joint venture, TikTok USDS Joint Venture LLC.
For those endlessly scrolling through “For You” pages, don’t expect immediate changes. But experts predict the shift will eventually alter the app experience for the 200 million Americans who use it. The core of the issue? The algorithm—that mysterious force that decides what videos you see—and whether it could be used to influence users or compromise data.
What’s Behind the Deal?
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The U.S. government has pressured TikTok to divest its U.S. operations for years, fueled by worries that its Chinese owner, ByteDance, could be compelled to share American user data with Beijing. Both TikTok and ByteDance have consistently denied these claims.
The possibility of a ban first surfaced during Donald Trump’s first term in 2020, gaining traction under President Joe Biden. In 2024, Biden signed legislation demanding ByteDance sell TikTok or face a nationwide prohibition. A legal battle ensued, briefly taking the app offline for U.S. users for 12 to 14 hours in January 2023, before Trump, then president-elect, signaled he would reverse the ban.
Last September, Trump announced a deal with China to allow TikTok to continue operating in the U.S. Binding agreements with American and global investors followed in December, according to a memo from TikTok CEO Shou Zi Chew. The latest announcement details the specifics of that agreement.
Under the terms, TikTok USDS Joint Venture LLC will safeguard U.S. user data, apps, and algorithms through enhanced data privacy and cybersecurity measures. Trump celebrated the deal on social media, stating he was “so happy to have helped in saving TikTok.” The White House and the Chinese embassy in Washington have been contacted for comment.
Who Now Owns TikTok in the U.S.?
TikTok says the new joint venture will function as an independent entity, overseen by a seven-member board with a majority of American directors. Adam Presser, formerly of WarnerMedia, has been appointed as the joint venture’s CEO.
Three managing investors will each hold a 15% stake in TikTok’s U.S. operations:
- Oracle – the cloud computing giant chaired by Larry Ellison, a Republican megadonor and longtime Trump ally
- Silver Lake – a U.S. tech investment firm managing approximately $116 billion in assets (£85.9 billion)
- MGX – an Emirati investor specializing in AI and technology
Oracle will be responsible for securing the data of TikTok’s American users and overseeing the retraining of the app’s algorithm. ByteDance will retain a 19.9% stake in the business. The remaining 35.1% is owned by a consortium including the family office of tech executive Michael Dell—another Trump supporter—and Vastmere Strategic Investments, an affiliate of Susquehanna International Group.
Susquehanna was co-founded by Trump ally Jeff Yass, who held roughly a 7% stake in ByteDance as of last year. Mark Dooley, Susquehanna’s managing director, will also serve on the new firm’s board, alongside TikTok’s global boss, Shou Zi Chew, and executives from Oracle, Silver Lake, and MGX.
What About TikTok’s Algorithm?
The algorithm is the “secret sauce” behind TikTok’s explosive popularity. A former social media executive previously explained that while other companies have attempted to replicate it—Instagram’s Reels and YouTube’s Shorts, for example—none have achieved the same level of success. “Generally, the one who introduces the technology just knows how to do it better.”
ByteDance initially resisted relinquishing its algorithm, a position supported by the Chinese government. However, last September, Beijing’s top cybersecurity regulator indicated it might allow ByteDance to license the algorithm to a U.S. owner.
The agreement stipulates that the algorithm will be retrained using only U.S. user data, protected to comply with American regulations, and “secured in Oracle’s US cloud environment,” according to TikTok. Experts anticipate this shift will impact the app, potentially resulting in a slower, less refined experience for American users, and a less effective content recommendation system.
Additional reporting by Koh Ewe
