TikTok closes deal to split US app from global business

TikTok has reached a deal that will allow the hugely popular short-video app to continue operating in the United States, it announced Thursday.

The agreement comes after a years-long feud between Washington and Beijing, which began during Trump’s first term in the White House, when he unsuccessfully tried to ban the app for national security reasons.

The platform was to be banned in the United States in January 2025 if its Chinese owner, ByteDance, failed to sell its American operations to American investors. But U.S. President Donald Trump has repeatedly delayed implementing legislation to remove the app.

The main source of contention was the app’s powerful algorithm, which dictates recommended content to users. This formula has now been licensed to the US owners of the app and will be trained on US data only.

Experts say this will definitely lead to changes, but it’s unclear how it will affect the 200 million Americans using the app.

For years, Washington has pressured TikTok to sell its U.S. operations, citing national security concerns over its Chinese owner ByteDance.

Lawmakers had expressed fears that Beijing could force the company to hand over U.S. users’ data. TikTok and ByteDance have always denied this claim.

The idea of ​​a TikTok ban, first floated by Trump during his first term in 2020, gained momentum under Joe Biden’s presidency. In 2024, Biden signed a law requiring ByteDance to sell TikTok or face a ban in the United States.

A legal battle ensued between ByteDance and the US government, and in January last year the app was taken offline for US users for 12 to 14 hours. This temporary blackout was reinstated after Trump, then president-elect, pledged to reverse the ban.

Last September, Trump announced that he had reached a deal with China to keep the app working in the United States.

And in December, binding agreements were signed with U.S. and international investors to operate TikTok’s U.S. business, according to a memo from its chief executive Shou Zi Chew.

More details about this deal were outlined in TikTok’s latest announcement.

Under the deal, a new company called TikTok USDS Joint Venture LLC will secure U.S. users’ data, applications and algorithms through privacy and cybersecurity measures.

Trump weighed in on the deal, writing on social media that he was “very happy to have helped save TikTok.”

The BBC has contacted the White House and the Chinese Embassy in Washington for comment.

TikTok says the new joint venture will operate as an independent entity governed by a seven-member board of directors with an American majority.

Adam Presser, formerly of WarnerMedia, has been named chief executive of the joint venture.

There are three investors managing TikTok’s U.S. operations, each with a 15% stake:

• Oracle – the cloud computing giant chaired by Larry Ellison, Republican megadonor and longtime Trump ally
• Silver Lake – a US technology investment firm which claims to have around $116bn (£85.9bn) in assets
• MGX – an Emirati investor in AI and technology

Oracle will be responsible for securing the data of TikTok’s U.S. users and overseeing the retraining of the app’s powerful content recommendation algorithm.

ByteDance will retain a 19.9% ​​stake in the company.

The remaining 35.1% of the company is owned by a group of companies that includes the family office of technology executive Michael Dell – another Trump supporter – and Vastmere Strategic Investments, a subsidiary of Susquehanna International Group.

Susquehanna was co-founded by Trump ally Jeff Yass, whose personal stake in TikTok owner ByteDance was about 7% last year. Its chief executive, Mark Dooley, will also be a member of the new company’s board of directors.

The board will also include TikTok global boss Shou Zi Chew, as well as executives from Oracle, Silver Lake and MGX.

This question is at the heart of the row over TikTok’s operations in the United States. Its algorithm is the “secret sauce” that has made the application immensely popular.

A former social media manager previously told the BBC that other companies had tried to recreate the algorithm, from Instagram’s Reels to YouTube’s Shorts, but they just weren’t as good.

“Usually, whoever introduces the technology simply knows how to do it better.”

ByteDance initially refused to part with its popular formula – a position supported by the Chinese government. But last September, Beijing’s top cybersecurity regulator signaled that Beijing could allow ByteDance to license the algorithm to a U.S. business owner.

According to the agreement, the algorithm will be retrained only on US user data, which will be protected to comply with US regulations.

The algorithm will be “secure in Oracle’s US cloud environment,” TikTok said.

The impact of this change will soon be felt by TikTok’s millions of American users.

Experts say this could mean a slower, lighter app that would work differently than the global version. The algorithm may also not recommend content as successfully as the current platform.

Additional reporting from Koh Ewe