China's ByteDance signs deal to form joint venture to operate TikTok US app

TikTok's Chinese owner, ByteDance, has said it has signed agreements with three major investors to form a joint venture to operate TikTok's US app led by American and global investors on Thursday.

It's a bid to avoid a US government ban, a significant step toward ending years of uncertainty.

The deal is a milestone for the short video app used regularly by more than 170 million Americans after years of battles that began in August 2020, when President Donald Trump first tried unsuccessfully to ban the app.

The details of the deal are in line with one unveiled in September, when Trump delayed until January 20 enforcement of the law that bans the app unless its Chinese owners sell it amid efforts to extract TikTok's US assets from the global platform. He also declared that the deal met the terms of the divestiture requirements required by a 2024 law.

"We have signed agreements with investors regarding a new TikTok US joint venture, enabling over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community," TikTok CEO Shou Zi Chew told employees in a memo seen by Reuters.

Under the deal, American and global investors will hold an 80.1 per cent stake while ByteDance will retain a 19.9 per cent stake in the new joint venture after its divestiture.

Chew said the joint venture will "operate as an independent entity with authority over US data protection, algorithm security, content moderation and software assurance."

The White House said in September the new joint venture will operate TikTok’s US app but questions remain about the deal.

Despite the divestiture requirements, Chew added that TikTok global's US entities "will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing."

The company told employees on Thursday that ByteDance and TikTok signed binding agreements with three managing investors: Oracle, Silver Lake and MGX, to form a new TikTok US joint venture named TikTok USDS Joint Venture LLC.

Oracle, Silver Lake and Abu Dhabi-based MGX will collectively own 45 per cent of the new entity, according to the memo, which confirms what Reuters and other outlets reported in September.

Oracle declined to comment. The White House referred questions to TikTok. TikTok said in the memo that the deal will enable "over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community. "

The deal, set on January 22, would end years of efforts to force ByteDance to divest its US business over national security concerns.

Representative John Moolenaar, a Republican who chairs the House Select Committee on China said previously he would host the leadership of the new TikTok entity at a hearing in 2026.

Trump has credited TikTok, which has 170 million US users, with helping him win reelection last year. Trump has more than 15 million followers on his personal TikTok account. The White House also launched an official TikTok account in August.

'BILLIONAIRE TAKEOVER'

Democratic Senator Elizabeth Warren said there were many unanswered questions.

"Trump wants to hand over even more control of what you watch to his billionaire buddies. Americans deserve to know if the president struck another backdoor deal for this billionaire takeover of TikTok," she said on X.

The US joint venture will be 50 per cent held by a consortium of new investors, including Oracle, Silver Lake and MGX with 15 per cent each; 30.1 per cent held by affiliates of certain existing investors of ByteDance; and 19.9 per cent will be retained by ByteDance, the memo said.

Trump said in September that Michael Dell, the founder, chairman and CEO of Dell Technologies; Rupert Murdoch, the chairman emeritus of Fox News owner Fox Corp and newspaper publisher News Corp, and "probably four or five absolutely world-class investors" would be part of the deal.

ByteDance did not immediately respond to a request for comment.

DATA PROTECTION

The 2024 law required TikTok to stop operating by January 19 unless ByteDance had completed a divestiture of the app's US assets. Trump began his second term as president on January 20 and opted not to enforce it.

Trump's order issued in September said the algorithm will be retrained and monitored by the US company's security partners, and operation of the algorithm will be under the control of the new joint venture. It gave them until late January to complete the deal.

The agreement on TikTok’s US operations includes the appointment by ByteDance of one of seven board members for the new entity, with Americans holding the majority of other seats. TikTok said Thursday the US joint venture will be "responsible for US data protection, algorithm security, content moderation, and software assurance".

Oracle will serve as the "trusted security partner" responsible for auditing and validating compliance, including "safeguarding sensitive US user data, which will be stored in a trusted and secure cloud environment in the United States run by Oracle".

Craig A. Huber, an analyst at Huber Research Partners, LLC, said he expected the deal to get waved through the approval process.

"At this stage, I see no regulatory issues, particularly given the federal government and President Trump were very involved in putting the whole sale together from the beginning," he said.