TikTok Finalises Agreement For Sale Of Its US Business

TikTok’s CEO informed staff members on Thursday that ByteDance, the company’s Chinese owner, has entered into legally binding contracts with US and international investors to conduct business in the US.

Chief executive Shou Zi Chew received a memo stating that a group of investors, including Oracle, Silver Lake, and the Emirati investment firm MGX, will hold half of the joint venture.

The agreement, which is scheduled to be finalised by January 22, would put a stop to Washington’s years-long attempts to compel ByteDance to divest its US business due to security concerns.

The move puts TikTok one step closer to assuring its long-term future in the US, even though the transaction is not yet finalised. It comes after a rule that was approved last year mandated that the app’s US version be either blocked in the US or split off from its parent business, ByteDance. As he pursued an agreement to give American ownership control of the well-known app, Trump repeatedly postponed enforcing the law.

It is consistent with a deal announced in September by US President Donald Trump to postpone the implementation of a regulation that would have prohibited the app unless it was sold.

“Over 170 million Americans will continue discovering a world of endless possibilities as part of a vital global community,” according to TikTok’s memo.

Oracle, Silver Lake, and Abu Dhabi-based MGX will each will hold 15% of the company, while ByteDance will keep 19.9%.

The document states further that affiliates of current ByteDance investors will hold an additional 30.1%.

As part of the agreement, Oracle, co-founded by Trump supporter Larry Ellison, will license TikTok’s recommendation system, according to a prior statement from the White House.

The agreement is the result of several delays.

The US Congress approved a bill prohibiting the app due to national security concerns in April 2024, under the administration of President Joe Biden, unless it was sold.

Trump repeatedly postponed the law, which was supposed to take effect on January 20, 2025, with a brief shut down, while his government worked out an agreement to transfer ownership. The US law prohibits TikTok unless ByteDance sells about 80% of its US assets to non-Chinese investors. 

In September, Trump claimed to have spoken with Chinese President Xi Jinping on the phone and that Jinping had approved the deal.

After the leaders met in person in October, it was still unclear what would happen to the platform.

Tensions over trade and other issues between the two countries continued to muddle the app’s destiny.

Massachusetts Institute of Technology lecturer Alvin Graylin stated that TikTok has become a bargaining chip in the wider US-China relationship. 

“With recent softening tensions, Beijing’s sign off on the structure and algorithm licensing now looks less like capitulation and more like calibrated de-escalation, letting both capitals claim a win at home.”

As previously stated by White House officials, the new organisation will retrain TikTok’s algorithm using US user data, and Oracle will be in charge of managing the storage of American data. Content moderation for US users will also fall under the purview of the US joint venture. Chew’s memo, however, implies that e-commerce, marketing, and advertising on the new US platform will still be handled by the ByteDance-controlled worldwide TikTok business.

When asked for response, the White House directed the BBC to TikTok.

Silver Lake and Oracle chose not to respond. MGX has been asked for comment by the BBC.

Senate Democrat Ron Wyden of Oregon criticised the agreement, claiming it would do “a thing to protect the privacy of American user.”

In accordance with the rules, TikTok’s recommendation system will be retrained using data from American users to guarantee that feeds are free of outside manipulation.

Senator Wyden responded that as it was unclear that it will even put TikTok’s algorithm in safer hands.

In an effort to give Congress more time to address China’s concerns, he was one of the US congressmen who pushed to extend the TikTok deadline in January. He was against the 2024 law.

The possibility of additional investors also caused some users to express caution.

Tiffany Cianci, a small business owner with over 300,000 followers and almost four million likes on the platform, expressed her hope that the new investors will continue to provide entrepreneurs like her with the same user experience.

Ms. Cianci expressed her hope that small company owners will be safeguarded.

TikTok claims over seven million US small businesses advertise their products and services on TikTok.

“I reserve judgement on whether or not we have saved the app for those small business,” she continued.

According to Ms. Cianci, she decided to promote TikTok since it offers profit-sharing on terms that are better than those of rivals like Meta.

Ms. Cianci has been actively involved in planning demonstrations on TikTok and in Washington over the past year in an effort to save the app.

The Chinese government’s approval is anticipated to be required before the acquisition closes. Beijing has not formally acknowledged Chinese President Xi Jinping’s support for the deal, despite Trump’s claims that he is.

Though regulatory permissions from both nations are anticipated is necessary for the merger to take place.

Guo Jiakun, a spokesman for China’s foreign ministry, responded to questions about the agreement to form the new US joint venture and whether China had approved it on Friday by saying, “As for the specific question, he had preferred that its a competent Chinese authorities.” China has a clear and consistent stance on the TikTok issue.