TikTok has achieved a significant milestone by entering into a joint venture agreement with major investors to secure its ongoing operation in the United States. This decision is a proactive measure against potential regulatory challenges arising from its Chinese ownership. In an internal memo, TikTok’s CEO Shou Zi Chew announced that the company, in collaboration with its parent firm ByteDance, will create a new US-based entity with support from Oracle, Silver Lake, and Abu Dhabi’s MGX. This strategic partnership is designed to comply with a 2024 US law mandating either the sale of TikTok’s American operations or the app’s closure.
Details of the Joint Venture
The newly established joint venture will have American and global investors holding over 80% of the entity, while ByteDance retains a 19.9% stake, the maximum allowed for a Chinese company under US law. Oracle, Silver Lake, and MGX will each own 15%, with existing ByteDance investors holding approximately 30%. Chew highlighted that this US joint venture will operate independently and focus on essential areas like US data protection, algorithm security, content moderation, and software assurance. This structure is intended to assure that American users’ data and content remain secure.
Role of Oracle and Operational Oversight
Oracle is designated as TikTok’s “trusted security partner,” responsible for auditing compliance and safeguarding sensitive US user data, which will be stored on Oracle’s cloud infrastructure within the United States. The new entity will also handle various commercial operations, including advertising, marketing, and e-commerce. TikTok’s US entities will manage global product interoperability. The agreement is anticipated to be finalized by January 22, 2026, although Chew has noted that further work is required before completion.
Political Context and Reactions
This agreement comes in the wake of years of scrutiny from US lawmakers, who have voiced concerns regarding the potential for Beijing to access American data or influence public opinion through TikTok’s algorithm. Former President Donald Trump initially supported banning the app during his first term but later postponed enforcement via executive orders. Trump has publicly backed the new arrangement, highlighting Oracle founder Larry Ellison as a key figure in the deal. Ellison has recently attracted attention for his substantial investments in media and technology.
Criticism and Future Outlook
Despite the strategic nature of the agreement, it has faced criticism from some US politicians. Democratic Senator Elizabeth Warren has expressed concerns about unresolved issues, accusing Trump of facilitating a “billionaire takeover” of TikTok. However, analysts suggest that the involvement of the White House in shaping this transaction might help mitigate regulatory challenges. As TikTok continues to operate with over 170 million users in the US, the outcome of this joint venture will be closely scrutinized by both supporters and critics alike.
Digihunt is not a financial advisor and this is not investment advice.