TikTok Avoids U.S. Ban With Oracle-Led Joint Venture Deal

TLDR

• TikTok’s U.S. operations will move to a new joint venture called TikTok USDS Joint Venture LLC, with Oracle, Silver Lake, and MGX as managing investors
• American and global investors will hold 80.1% of the new entity while ByteDance retains 19.9% ownership
• The deal values TikTok’s U.S. business at around $14 billion and is set to close on January 22, 2025
• Oracle will serve as the trusted security partner, storing U.S. user data in its cloud computing centers and auditing compliance
• ByteDance-controlled TikTok entities will separately manage e-commerce, advertising, and marketing operations

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TikTok CEO Shou Zi Chew informed employees on Thursday that the company signed binding agreements to create a new U.S. joint venture. The move aims to satisfy national security requirements and avoid a ban in the United States.

The new entity is named TikTok USDS Joint Venture LLC. Oracle, Silver Lake, and Abu Dhabi-based MGX will serve as the three managing investors.

Under the agreement, American and global investors will hold 80.1% of the new company. ByteDance will retain a 19.9% stake in the venture.

The deal is valued at approximately $14 billion according to Vice President JD Vance, who shared this figure in September. This valuation came in below analyst estimates at the time.

A consortium of new investors including Oracle, Silver Lake, and MGX will hold 50% of the joint venture, with each taking 15%. Just over 30% will be held by affiliates of certain existing ByteDance investors. ByteDance will maintain almost 20% ownership.

The joint venture will close on January 22, 2025. This date falls within the deadline set by a national security law that required ByteDance to divest TikTok’s U.S. operations.

Deal Structure and Operations

The new joint venture will handle U.S. data protection, algorithm security, content moderation, and software assurance. Oracle will act as the trusted security partner responsible for auditing and validating compliance.

U.S. user data will be stored in Oracle’s cloud computing data centers located in the United States. The company will retrain TikTok’s content recommendation algorithm on U.S. user data.

ByteDance-controlled TikTok entities will manage separate functions. These include global product interoperability, e-commerce, advertising, and marketing activities.

The new company will operate with a seven-member board of directors. Americans will hold the majority of board seats, while ByteDance will appoint one member.

Background and Legal Requirements

President Donald Trump signed an executive order in September 2024 approving the proposed deal. The order blocked the attorney general from enforcing the national security law for 120 days.

The Supreme Court upheld the national security law in January 2024. The law required China-based ByteDance to divest TikTok’s U.S. operations or face a ban.

President Trump first attempted to ban TikTok in August 2020 over national security concerns. The app has more than 170 million regular users in the United States.

Trump credited TikTok with helping him win reelection and has over 15 million followers on his personal account. The White House launched an official TikTok account in August 2024.

Oracle shares rose nearly 6% in premarket trading on Friday following the announcement. The company will receive revenue for providing technology and data services to the joint venture.

Questions remain about the business relationships between the new joint venture and ByteDance. The ByteDance-controlled entity will be the revenue-generating operation, while the joint venture receives a portion of revenue for its services.

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