TikTok Strikes Deal for New U.S. Ending a lengthy legal saga
A group of non-Chinese investors, according to the popular video app’s Chinese parent company, would establish an American TikTok to circumvent a federal ban. ByteDance, TikTok’s Chinese owner, and a group of non-Chinese investors had agreed to form a new United States, the company announced on Thursday. TikTok, bringing an end to a six-year legal saga that saw the app banned by Congress and become embroiled in political maneuvering between two global superpowers.
More than 80% of the new business will be owned by investors like the software giant Oracle, an Emirati investment firm called MGX, and another investment firm called Silver Lake. That list also includes the personal investment entity for Michael Dell, the tech billionaire behind Dell Technologies, and other firms, TikTok said. Adam Presser, TikTok’s former head of operations, will be the chief executive for the U.S. TikTok.
The deal aims to ease TikTok’s ties to China and address concerns about Beijing’s potential use of the app to spy on or manipulate its more than 200 million US users. The changes enable “our U.S. users to continue to discover, create and thrive as part of TikTok’s vibrant global community and experience,” Shou Chew, TikTok’s chief executive, said in an internal memo that called the move “great news.”
The agreement, which was hammered out over more than a year, resolves existential questions about TikTok’s future. The app — with its unceasing feed of lip-syncs, political endorsements, conspiracy theories and skin care tutorials — would have had to leave the American market if it did not separate from ByteDance.
It was also the end of a legal odyssey. Universities, a number of U.S. military branches, the vast majority of the House of Representatives, and Presidents Trump and Joseph R. Biden Jr. had tried to ban or block TikTok, with unanimous support from the Supreme Court. Influencers, mobilized by the app, lobbied politicians and mounted protests to save their feeds and follower counts. TikTok became embroiled in a trade war between the United States and China, as the nations engaged in a heated contest over technology and industrial supremacy.
However, the drama went on for so long with so little to show for it that even some of the people who had tried to save the app stopped worrying about it. Naomi Hearts, a 28-year-old content creator in Los Angeles who twice traveled to Washington as part of TikTok’s lobbying efforts, said she felt “detached” from the platform after years of upheaval.
“I feel like it’s going to be another day,” Ms. Hearts stated this week in an interview, anticipating the deal’s conclusion. It was unclear how much, if any, the deal would alter the TikTok user experience in the United States. Since the outlines of the plan were released months ago, users have raised concerns about whether the new owners will overhaul the algorithm that personalizes their feeds. And experts have cautioned that the arrangement may fail to address the national security concerns.
The deal is based on a federal law that the Supreme Court upheld in 2024 and would have banned the app if it didn’t separate from ByteDance by early 2025. Some users were in a tailspin when the app went dark for 14 hours as the law’s deadline approached. But Mr. Trump formally delayed the enforcement of the law several times after he took office again last January, as he pushed the company to reach a deal for new ownership.
Mr. Trump celebrated the announcement in a post on Truth Social, the social media platform he owns, calling it a “dramatic, final, and beautiful conclusion.”
“I am so happy to have helped in saving TikTok!” He wrote, adding, “I only hope that those who use and love TikTok will remember me long into the future.” Oracle, MGX, and Silver Lake will each own 15% of TikTok’s operations in the United States under the new arrangement. ByteDance will control just under 20%. Among the other investors is Mr. Dell’s office and a long list of investment firms, including affiliates of General Atlantic and Susquehanna, both of which previously invested in ByteDance.
The majority of the seven members of the new United States board A December memo to TikTok employees stated that the company will be American. Mr. Chew has a seat on the board.
The new company will decide which posts to keep and which to remove from TikTok’s feed by moderation. The value of the American version of TikTok is unknown. Vice President JD Vance said in September that a U.S. The TikTok business would be worth $14 billion. ByteDance, by contrast, has been valued at $480 billion in the private markets.
Mr. Trump signed an executive order in September that gave formal approval to the arrangement, a move required under the 2024 law.
The Chinese government has not publicly commented on TikTok’s announcement. Beijing had been a major obstacle to a deal’s completion for years. China added technologies like algorithms and source codes to its export control list when the United States first tried to get TikTok sold. This gave China the authority to weigh in on any deal involving the app. Last year, Trump administration officials said they had won Beijing’s support for a deal. China’s statements were more vague.
Several of the new investors have ties to Mr. Trump, causing some TikTok users to worry that the app might start showing more content that is in line with the views of the president or the positions taken by the government of the United States. Larry Ellison, Oracle’s billionaire co-founder, has a close relationship with Mr. Trump and lobbied the president directly on behalf of the current bid by his son, David Ellison, to buy Warner Bros. Discovery. MGX has done business with the Trump family’s cryptocurrency firm, World Liberty Financial.
The TikTok deal, according to Georgetown University law and technology professor Anupam Chander, allowed for “more theoretical room for one side’s views to get a greater airing.” “My worry all along is that we may have traded fears of foreign propaganda for the reality of domestic propaganda,” he added.
There are also lingering concerns that ByteDance will still influence the app’s content. In addition to its stake, ByteDance will keep TikTok’s coveted algorithm, which it will license to the new U.S. entity.
That arrangement may fall short of the 2024 law, which required the divestment to end any “operational relationship” between ByteDance and TikTok in the United States, critics said.
Senior fellow at the Hudson Institute Michael Sobolik stated, “They may have saved TikTok.” “But the national security concerns are still going to continue.”
Thursday’s announcement is something of a mash-up of two earlier proposals aimed at distancing TikTok from ByteDance.
The app’s meteoric rise in popularity was accompanied by difficulties in the United States. This popularity surged during the Covid-19 pandemic, when the housebound flocked to their phones to entertain themselves with dance trends and memes. Soon after, Congress and the first Trump administration grew increasingly anxious that under Chinese law, ByteDance could be forced to provide personal information about Americans to Beijing’s military and intelligence apparatus.
In 2020, Mr. Trump threatened to ban TikTok. He then unsuccessfully tried to force ByteDance to sell the app to a consortium that included Oracle and Walmart.
TikTok spent years pushing an alternative to a sale. Oracle would be in charge of overseeing the American user data stored on servers in the United States under that proposal, which the company referred to as Project Texas. Although Oracle would audit ByteDance’s work, it would still produce the app’s code. Six years later, negotiators have settled on a consortium arrangement. ByteDance is still involved, as is Oracle, a major player. Lindsay Gorman, a former senior adviser in the Biden administration, stated, “We’ve gone round and round and ended up not too far from where we started.”
