TikTok signs binding deal to form new U.S. unit with Oracle-led investor group

TikTok has signed binding agreements to create a new U.S.-based joint venture with a group of investors led by Oracle, aiming to secure the platform’s continued operation in the United States. The deal, confirmed in an internal memo seen by The Associated Press, is expected to close on Jan. 22 and sets out ownership, governance and data security terms designed to address long-running U.S. national security concerns.

Deal structure and ownership

Under the agreement, a consortium of investors will collectively own 50% of the new TikTok U.S. venture. Oracle, private equity firm Silver Lake, and Abu Dhabi-based investment firm MGX will each hold a 15% stake, according to the memo from TikTok Chief Executive Shou Zi Chew.

ByteDance, TikTok’s China-based parent company, will retain a 19.9% stake. A further 30.1% will be held by affiliates of existing ByteDance investors. The memo did not identify those affiliates, and neither TikTok nor the White House commented publicly on the remaining ownership details.

The new U.S. entity will be governed by a seven-member board with a majority of American directors, the memo said, and will operate under terms intended to “protect Americans’ data and U.S. national security.”

Data storage and platform operations

As part of the agreement, U.S. user data will be stored domestically and managed through systems operated by Oracle. TikTok said users should see no change in the app’s functionality, while advertisers will continue to reach global audiences without disruption.

The U.S. venture will assume responsibility for content moderation and policy enforcement within the country. TikTok said these measures are designed to ensure operational continuity while meeting U.S. regulatory expectations.

In a message to employees, Chew thanked staff for their work during the prolonged negotiations and said the company’s focus would remain on serving users, creators and businesses in the U.S. and globally.

The algorithm question

The handling of TikTok’s recommendation algorithm has been central to negotiations with U.S. authorities. According to the memo, the algorithm used in the United States will be retrained on U.S. user data to ensure the content feed is “free from outside manipulation.”

American officials have long argued that ByteDance’s control of the algorithm could make it vulnerable to influence by Chinese authorities, a claim the company has repeatedly denied. China has previously maintained that the algorithm is subject to export controls and must remain under Chinese jurisdiction.

A U.S. law passed with bipartisan support requires any divestment of TikTok to sever ties between the U.S. platform and ByteDance, explicitly including control over the algorithm. How the new structure satisfies that requirement is expected to remain under close regulatory scrutiny.

Political and legal backdrop

The agreement follows years of uncertainty over TikTok’s future in the United States. Congress passed legislation, later signed by President Joe Biden, that would ban the app unless ByteDance divested its U.S. operations by a January 2025 deadline.

TikTok briefly went offline when the deadline took effect. On his first day back in office, President Donald Trump signed an executive order allowing the platform to continue operating while negotiations over a sale or restructuring continued.

Subsequent executive orders extended the deadline several times. A proposed deal earlier this year to spin off TikTok into a U.S.-owned company collapsed after China withdrew following a separate U.S. tariff announcement, according to White House officials. Further extensions were issued in June and September as talks continued.

Market reaction and user reach

TikTok remains one of the most widely used social media platforms in the United States, with more than 170 million users. A Pew Research Center report published this fall found that about 43% of U.S. adults under 30 regularly get news from TikTok, a higher share than for YouTube, Facebook or Instagram.

Investors responded positively to the announcement. Shares of Oracle rose $9.07, or about 5%, in after-hours trading to $189.10.