TikTok has finalized an agreement to spin off its U.S. operations to an investor group primarily composed of American entities, including software company Oracle. The deal is scheduled to conclude on January 22.
Agreement Details
A memo from TikTok CEO Shou Chew to employees confirmed the agreement. Under the terms, TikTok's algorithm and the data collected from its millions of American users will be overseen by the new U.S. entity. However, the algorithm itself will remain owned and updated by Beijing-based ByteDance, with oversight from American auditors.
The new entity that will manage the American version of TikTok has a complex ownership structure:
- A consortium of investors, including Oracle, private equity firm Silver Lake, and United Arab Emirates state-backed investment firm MGX, will control 45% of the new U.S. TikTok entity.
- Existing investors of ByteDance, TikTok's Chinese parent company, will hold approximately one-third of the newly formed operation.
- ByteDance will retain around 20% ownership.
A seven-member board of directors, predominantly American, will govern this new entity.
Legislative Background
This agreement follows over five years of governmental scrutiny and legislative pressure from Washington concerning TikTok's connections to China. In 2024, Congress passed a law that mandated the sale of the app or faced a ban, a law subsequently upheld by the Supreme Court in January. For several months, TikTok operated in technical violation of federal law until then-President Trump issued multiple executive actions to delay the enforcement of this ban.
Global Operations
TikTok serves an estimated 2 billion users worldwide, with less than 10% of its global user base located in the United States. The establishment of a separate U.S. entity will result in two distinct operational versions of the app: one managed by a U.S.-backed company with specific content and data security protocols for American users, and another operated globally by ByteDance for the rest of the world.