After nearly half a decade of congressional hearings, Supreme Court rulings, temporary bans, and enough executive orders to fill a small library, TikTok has finally signed a deal to spin off its U.S. operations to a consortium of American investors.
CEO Shou Zi Chew broke the news to employees Thursday in an internal memo, announcing the creation of “TikTok USDS Joint Venture LLC,” a new entity that will house the American version of the world’s most addictive video app.
The deal, set to close January 22, 2026, values TikTok’s U.S. business at approximately $14 billion. Oracle, Silver Lake, and Abu Dhabi-based MGX will collectively own 45% of the new venture, with each holding a 15% stake. ByteDance, TikTok’s Chinese parent company, retains 19.9%, while affiliates of existing ByteDance investors hold just over 30%.
What the Deal Actually Means for 170 Million American Users
For the 170 million Americans who scroll through TikTok daily, the practical changes may be subtle, at least initially. The new U.S. entity will be responsible for data protection, algorithm security, content moderation, and software assurance. Oracle will serve as the “trusted security partner,” continuously monitoring how the algorithm pushes content to users and storing American data in its U.S.-based cloud infrastructure.
Here’s where it gets interesting: ByteDance will license its recommendation algorithm to the new U.S. entity, which will then retrain it “from the ground up” on American user data. The goal is to ensure the content feed is “free from outside manipulation,” according to the memo. But the underlying algorithm technology still belongs to Beijing-based ByteDance, raising immediate questions about whether this arrangement actually satisfies the letter of the law Congress passed in 2024.
The Larry Ellison Factor
Oracle’s central role in this deal is no coincidence. Larry Ellison, Oracle’s co-founder and controlling shareholder, has cultivated a close relationship with President Trump throughout his second term. Oracle has been a darling of the AI boom, with Ellison’s fortune swelling past $230 billion according to Bloomberg’s estimates. His son David recently acquired Paramount Global with Trump administration approval and is now pursuing a hostile $108 billion bid for Warner Bros. Discovery.
The Ellison family’s expanding media empire, combined with Oracle’s existing cloud partnership with TikTok through “Project Texas,” positions the company as a kingmaker in the American digital landscape. Privacy advocates have noted the concentration of media power this represents, particularly given the Ellisons’ political connections.
Does This Deal Actually Comply With the Law?
This is the $14 billion question. The Protecting Americans from Foreign Adversary Controlled Applications Act, which Congress passed and President Biden signed in 2024, mandated that TikTok be divested from ByteDance or face a ban. The Supreme Court upheld that law in January 2025. But the law specifically requires that TikTok U.S. and ByteDance have “no operational relationship.”
The deal as structured leaves significant room for continued ByteDance involvement. The Chinese parent company retains nearly 20% ownership, receives roughly 50% of U.S. profits according to Bloomberg, and continues to manage global e-commerce, advertising, and marketing on the U.S. platform.
“The law requires a clean break from ByteDance. This structure doesn’t meet that standard,” one national security analyst told NPR. “It looks more like a franchise deal that leaves TikTok’s core technology in China than a true divestment.”
Republican critics within Trump’s own party have argued the arrangement may not pass legal muster. The White House declined to comment on whether the deal satisfies the statutory requirements.
What China Gets Out of This
The deal marks a significant diplomatic win for Beijing, which had resisted any arrangement that would strip ByteDance of its algorithmic crown jewels. Chinese regulators have not officially approved the transaction, though Trump has claimed President Xi Jinping is on board following their discussions.
The Chinese foreign ministry offered a carefully worded response Friday: “The Chinese government respects the wishes of the company in question, and would be happy to see productive commercial negotiations in keeping with market rules lead to a solution that complies with China’s laws and regulations and takes into account the interests of both sides.”
Translation: Beijing is fine with ByteDance keeping its algorithm, maintaining profit streams, and preserving the fundamental technology architecture that made TikTok worth fighting over in the first place.
The Bigger Picture on Tech Sovereignty
This deal arrives at a moment when the lines between technology platforms, national security, and geopolitical competition have never been blurrier. TikTok has become the test case for how democracies handle foreign-owned apps that collect massive amounts of citizen data and influence what hundreds of millions of people see every day.
The outcome here will likely serve as a template for future confrontations. If a “partial divestment” that leaves core technology in foreign hands satisfies national security concerns, it opens the door for similar arrangements across the tech sector. If legal challenges force a stricter interpretation, the implications for cross-border technology investment could be profound.
For now, American TikTok users can keep scrolling. The app isn’t going anywhere. Whether the underlying national security concerns that prompted years of legislative and legal action have actually been addressed is a question that will take considerably longer to answer.
Oracle shares jumped more than 5% in after-hours trading following the announcement. Sometimes the market tells you everything you need to know about who the real winners are.
Sources: TechCrunch, CNBC, Bloomberg, NPR, CNN, Axios, NBC News, PBS NewsHour