Leaked Memo Reveals TikTok's US Ownership Changes Without Key Business Control

Although TikTok's ownership landscape in the US is set to change, the real control over its lucrative divisions isn't shifting much.

This will be a partial shift in ownership through a joint endeavor. Oracle, led by Larry Ellison, together with Abu Dhabi's MGX and Silver Lake private-equity, are stepping in as leading investors.

The extent of their influence over financial operations remains minimal. Based on a memo by TikTok's CEO Shou Chew, accessed by Business Insider, the new backers will prioritize security functions, such as data stewardship and algorithm enhancement. Meanwhile, ByteDance retains core responsibilities over ad services and e-commerce.

Business Hierarchy and Responsibilities

The US venture will emerge from the current TikTok US Data Security group, acting independently, emphasizing US data protocols, algorithm governance, moderation, and software dependability. Nevertheless, TikTok's global branch, overseen by ByteDance, will handle cross-national product links and ventures, including marketing, digital sales, and shopping platforms.

Chew noted that new stakeholders, despite being part of the financial pie, won't directly influence areas like TikTok's digital shopping or advertising divisions. ByteDance remains at the helm of these sections.

Economic and Security Implications

This configuration, leaning more towards protectionist issues rather than commercial prowess, could explain why a White House representative pegged the agreement's value at $14 billion—a sharp contrast to Morningstar's June evaluation of $50 billion.

Under the suggested deal structure, which Chew anticipates finalizing by January's end, Oracle, Silver Lake, and MGX will collectively own 45% of the US segment. Concurrently, investors previously aligned with ByteDance will secure roughly 30% control, while a nameless set of new financiers will clinch 5%.

ByteDance will continue to possess just shy of a fifth of the US market share but will oversee global operations, directing US-specific e-commerce and marketing initiatives.

Strategic Significance and Employee Concerns

For TikTok, grappling with legislative pressures to offload its US operations by 2025 under threat of a potential ban, this arrangement is beneficial.

With fresh leadership roles and structures under negotiation, TikTok, ByteDance, and MGX have opted not to comment on these developments. Likewise, Oracle and Silver Lake remain silent on the matter.

Future Leadership and Organizational Uncertainty

The primary concern within TikTok and ByteDance surrounds leadership and organizational clarity post-agreement. According to one employee, even with a set deal, its implications remain ambiguous, leaving many not foreseeing immediate changes.