TikTok has finalized a deal with Oracle and two other investors that will allow the popular social video platform to continue its business in U.S.
The deal, expected to close on Jan. 22, will be 50% held by a new investor consortium that includes tech giant Oracle, Silver Lake and MGX, a technology fund in the United Arab Emirates (with each holding 15%). The rest of the group is made up of ByteDance owning 19.19% and affiliates of existing ByteDance investors holding 30.1%, TikTok said in a memo to employees.
“With these agreements in place, our focus must stay where it’s always been — firmly on delivering for our users, creators, businesses and the global TikTok community,” TikTok CEO Shou Zi Chew wrote in his memo.
The company’s future for many years in the U.S. had been uncertain, amid security concerns among legislators about ByteDance’s ties to China. TikTok’s parent company, ByteDance had been under pressure to divest its ownership in the app’s U.S. operations or face a nationwide ban, due to a law Congress passed that went into effect in January. President Trump has signed orders that have allowed TikTok to keep operating in the country and in September signed an executive order outlining the new joint venture.
The venture, which would oversee U.S. data protection, algorithm security, content moderation and software assurance, would be governed by a seven-member board that is majority American, Chew said in his memo. Oracle will be the security partner responsible for “auditing and validating compliance with the agreed upon National Security Terms,” Chew wrote.
Oracle Chief Executive Larry Ellison is also a party in effort to buy Warner Bros. Discovery.
Oracle did not return a request for comment. Silver Lake declined to comment. The White House on Thursday referred questions about the deal back to TikTok. In September, Trump said that Chinese President Xi Jinping had approved the deal.
“These safeguards would protect the American people from the misuse of their data and the influence of a foreign adversary, while also allowing the millions of American viewers, creators, and businesses that rely on the TikTok application to continue using it,” Trump stated in his executive order.
The announcement will come as a relief to some creators and businesses who rely on TikTok to entertain and reach fans and customers.
“I hope it just stays true to the platform and the independence we get from it,” said Yasmine Sahide, who posts comedy videos on TikTok and has 2.4 million followers. “I hope we’re still able to monetize our videos the same way because without that, I think a lot of people would leave or feel uninspired.”
Keith Lee, a TikTok creator who posts videos about food, said he expects the algorithm to change.”I just hope that we can still stay connected with our community and reach an audience the same way as before,” said Lee, who has 17.3 million followers.
Many TikTok creators are based in Southern California, close to TikTok’s office in Culver City. Over the years when TikTok’s future appeared uncertain, some of those creators diversified, posting their content to other platforms like YouTube and Instagram.
“It’s a smart way to avoid ownership and data issues,” said Ray Wang, principal analyst at Constellation Research, of the deal.
If finalized, the deal would remove a persistent issue in Beijing-Washington relations and signal progress in broader talks. But it would also deprive China’s most valuable private company of total control of an American social media phenomenon.
ByteDance’s coveted algorithms are considered central to TikTok’s business. Under the the deal proposed by Washington, ByteDance will license its AI recommendation technology to a newly created U.S. TikTok entity, which will use the existing algorithm to retrain a new system that is secured by Oracle, according to Bloomberg. The algorithm will be retrained on U.S. user data by the U.S. joint venture, according to TikTok.
Some industry observers questioned whether the deal addresses the larger concerns surrounding TikTok in the law Congress passed.
“While these executive orders positively have allowed the platform to operate and maintain the venue for speech, they do not resolve the underlying concerns about the law, which could be applied to other platforms in the future and raise questions about executive power,” said Cato Institute senior fellow in tech policy Jennifer Huddleston in a statement.
“Just because TikTok remains available under such orders does not mean that the policy concerns about the underlying law have been resolved.”
Bloomberg contributed to this report.
