TikTok Strikes Agreement for U.S. Operations with Oracle Consortium

As of December 18, the social media phenomenon TikTok finalized a transaction to transfer its U.S. operations to a consortium of American stakeholders, spearheaded by Oracle, the software giant.

The finalized arrangement is expected to be completed on January 22, as noted in a communication from TikTok's CEO Shou Chew, which was later verified by NPR.

The vast trove of data and the engaging recommendation algorithm of TikTok in the United States will be managed by a newly formed American entity. Nevertheless, ByteDance, based in China, will retain rights to the algorithm, with updates subject to American oversight, according to sources with knowledge of these terms.

Under the newly brokered deal, almost half of the supervisory body for TikTok’s American division will be comprised of Oracle and other investors such as Silver Lake and MGX—funded by the UAE—collectively holding 45% control.

Moreover, approximately 33% of the new TikTok U.S. structure will belong to ByteDance’s existing investors, with ByteDance itself retaining a 20% stake.

A board of seven directors will govern this new entity; the majority of them are Americans, according to details shared in a memo circulated by Axios.

This resolution comes after more than five years of escalating pressure from Washington, following bipartisan apprehensions over TikTok's Chinese affiliations. These tensions led Congress to propose legislation in 2024 aimed at banning the app unless ownership was transferred.

Legislative and Regulatory Dynamics

Though the legislation was enacted in January, TikTok faced a temporary reprieve from enforcement due to executive orders delaying its implementation, even as it remained technically noncompliant with federal mandates.

Globally, TikTok boasts around 2 billion users, with U.S. users constituting less than 10% of this number.

Implications of Split Operations

The establishment of a separate U.S.-regulated version of TikTok offers a new dimension: One segment will be managed by an entity supported by American investment, incorporating additional data security measures and content monitoring, while the global version remains under ByteDance's exclusive administration.