TikTok signs agreement for new joint venture keeping it online in the U.S.

TikTok has finalized a deal with Oracle and two other investors that will allow the popular social video platform to continue operations in the United States.

The deal, expected to close on January 22, will be 50% owned by a new consortium of investors including tech giant Oracle, Silver Lake and MGX, a UAE technology fund, each holding 15%. TikTok parent company ByteDance will own 19.9% ​​of the U.S.-based joint venture, while subsidiaries of existing ByteDance investors will own 30.1%, TikTok said in a memo to employees.

“With these agreements in place, our focus must remain where it has always been: firmly on the satisfaction of our users, our creators, our businesses, and the global TikTok community,” TikTok CEO Shou Zi Chew wrote in his note.

The deal lifts the shadow that has loomed over the future of TikTok, which has become one of the world’s most dominant social media platforms and has a large presence in Culver City.

The company’s future in the United States had been uncertain for many years due to security concerns from lawmakers over parent company ByteDance’s ties to China. ByteDance had been under pressure to divest its stake in the app’s U.S. operations or face a nationwide ban after Congress passed a law that took effect in January. President Trump — who years ago led the campaign to ban TikTok in the United States — argued for shutting down the company and signed orders that allowed TikTok to continue operating in the country and signed an executive order in September outlining the new joint venture.

The company, which would oversee data protection, algorithm security, content moderation and software assurance in the United States, would be governed by a seven-member board of directors with an American majority, Chew said in his memo. Oracle will be the security partner responsible for “auditing and validating compliance with agreed national security conditions,” Chew wrote.

Oracle Chief Executive Larry Ellison and his family are also leading the effort to buy Warner Bros. Discovery.

Oracle did not return a request for comment. Silver Lake declined to comment. The White House referred questions about the deal to TikTok on Thursday. In September, Trump said Chinese President Xi Jinping had approved the deal.

“These safeguards would protect the American people from the misuse of their data and the influence of a foreign adversary, while also allowing the millions of American viewers, creators and businesses who rely on the TikTok app to continue using it,” Trump said in his executive order.

This announcement will also come as a relief to some creators and businesses who rely on TikTok to entertain and reach their fans and customers.

“I hope it stays true to the platform and the independence we get from it,” said Yasmine Sahide, who posts comedy videos on TikTok and has 2.4 million followers. “I hope we can still monetize our videos in the same way, because without that I think a lot of people would leave or feel uninspired.”

Keith Lee, a TikTok creator who posts videos about food, said he expects the algorithm to change. “I just hope we can still stay connected with our community and reach an audience the same way we did before,” said Lee, who has 17.3 million followers.

Many TikTok creators are based in Southern California, near TikTok’s Culver City office. Over the years when TikTok’s future seemed uncertain, some of these creators branched out, posting their content on other platforms such as YouTube and Instagram.

“It’s a smart way to avoid ownership and data issues,” Ray Wang, principal analyst at Constellation Research, said of the deal.

If finalized, the deal would eliminate a lingering problem in Beijing-Washington relations and mark progress in broader negotiations. But it would also deprive China’s most valuable private company of full control of an American social media phenomenon.

ByteDance’s coveted algorithms are considered essential to TikTok’s business. Under the deal proposed by Washington, ByteDance will license its artificial intelligence recommendation technology to a newly created US entity TikTok, which will use the algorithm to retrain a new system secured by Oracle, according to Bloomberg. The algorithm will be retrained on US user data by the US joint venture, according to TikTok.

Some industry observers question whether the deal addresses broader concerns about TikTok in the law passed by Congress.

“While these executive orders have allowed the platform to operate and maintain the venue for speech, they do not address underlying concerns about the law, which could apply to other platforms in the future and raise questions about executive power,” Jennifer Huddleston, senior technology policy fellow at the Cato Institute, said in a statement.

“Just because TikTok remains available under such orders does not mean that policy concerns about the underlying law have been resolved. »

Bloomberg contributed to this report.