The years-long saga over the future of TikTok in America is coming to an end. The US arm of the popular social media app, owned by Chinese tech giant ByteDance, will soon be majority owned by a consortium of American investors that includes Oracle.
The deal was detailed in an internal memo from TikTok CEO Shou Chew, first reported by Axios. Oracle, along with private equity firm Silver Lake and Abu Dhabi-based investment firm MGX, will own 45 percent of TikTok’s US operations. ByteDance will retain a less than 20 percent stake, and companies owned by ByteDance’s investors will own the remaining roughly one-third.
MGX did not respond to The Observer’s requests for comment. Oracle and Silver Lake declined to comment.
The development follows years of concern about ByteDance’s access to the data of US citizens, the estimated 170 million of whom use TikTok. Attempts to block the program in the US or force the sale to American owners began last year under the Biden administration, and the deadline has been extended several times by President Donald Trump.
The terms of the new TikTok deal appear to mirror the framework laid out by the White House in September to put part of the US company in domestic hands. Under that proposal, Oracle would be responsible for re-engineering TikTok’s algorithm by re-training a new version for the US market and protecting American users’ data in a secure cloud. At the time, Trump said that Chinese President Xi Jinping had expressed approval of the plans.
Oracle will play a similar role in the new TikTok deal, which is expected to close on Jan. 22. The unit’s American owners will oversee “retraining the content recommendation algorithm on US user data to ensure content feeds are free from external manipulation,” according to Chew’s memo, which also notes that Oracle will serve as a “trusted security partner.”
Austin-based Oracle, founded by billionaire Larry Ellison, emerged as the winner among a crowded field of American players — including MrBeast and Perplexity AI — bidding for TikTok ownership. The deal is set to deepen the relationship between TikTok and the tech company, which already helps the platform store US user data. Oracle shares are up more than 7 percent today (December 19).
The new deal is expected to value TikTok at around $14 billion, according to Axios. After its closure, TikTok’s US operations “will operate as an independent entity with jurisdiction over US data protection, algorithm security, content moderation and software verification,” the memo said, while “TikTok’s US entities will manage global product collaboration and certain commercial functions, including e-commerce, advertising and marketing.” The American program will be managed by a seven-member board, mostly American.
The deal, which is pending approval by Chinese regulators, will resolve a long-standing point of contention between Washington and Beijing. However, not all lawmakers are convinced that it goes far enough to protect national security or protect the data of US citizens.
“This deal will do nothing to protect the privacy of American users,” said Senator Rob Wyden, Democrat of Oregon, in a statement.