TikTok has reached a deal with Oracle, Silver Lake, and MGX to continue operating in the United States. The agreement, slated to close on January 22, aims to resolve long-standing national security concerns that threatened the popular social video platform.
A New Ownership Structure
The deal establishes a new investor consortium holding 50% of TikTok’s U.S. operations. Oracle, Silver Lake, and MGX, a technology fund based in the United Arab Emirates, will each hold a 15% stake. TikTok’s parent company, ByteDance, will retain 19.9% ownership, while existing ByteDance investors will control 30.1%.
TikTok CEO Shou Zi Chew stated the company’s focus will remain on serving its users, creators, and the broader TikTok community. The agreement removes uncertainty surrounding the platform’s future, particularly for the large creator base centered in Culver City.
Security Concerns and Congressional Action
The future of TikTok in the U.S. has been in question due to legislators’ concerns about ByteDance’s connections to China. ByteDance faced pressure to divest its U.S. operations or risk a nationwide ban following the passage of a relevant law that took effect in January. The new venture will oversee U.S. data protection, algorithm security, content moderation, and software assurance.
Oracle will serve as the security partner, responsible for auditing and validating compliance with agreed-upon national security terms. A seven-member board, with a majority of American members, will govern the venture.
The deal’s approval by Chinese President Xi Jinping was reported by President Trump in September. Shares of Oracle increased by 7% on Friday, closing at $191.97, following a period of investor uncertainty regarding the AI market.
Implications for Users and Creators
The agreement is expected to provide relief to TikTok creators and businesses who rely on the platform. Yasmine Sahid, a TikTok creator with 2.4 million followers, expressed hope that the platform will maintain its current functionality and monetization options. Some creators have already diversified their presence to platforms like YouTube and Instagram as a precaution.
ByteDance’s algorithm, considered central to TikTok’s success, will be licensed to the new U.S. entity and retrained on U.S. user data with Oracle’s security oversight.
However, some observers, including Jennifer Huddleston, a senior fellow at the Cato Institute, have questioned whether the deal fully addresses the underlying concerns of the law that prompted it. She noted that the executive orders allowing TikTok to operate do not necessarily resolve the broader policy issues.
Frequently Asked Questions
What is the main outcome of this deal?
The deal allows TikTok to continue operating in the U.S. under a new ownership structure designed to address national security concerns.
Who are the key players in this agreement?
The key players are TikTok (ByteDance), Oracle, Silver Lake, MGX, and the U.S. government, particularly through the actions of President Trump.
What role will Oracle play in the new arrangement?
Oracle will be the security partner, responsible for auditing and validating compliance with national security terms and securing the retraining of TikTok’s algorithm on U.S. user data.
As this new structure takes shape, it remains to be seen how effectively it will address ongoing concerns and what impact it will have on the future of TikTok and the broader social media landscape.
