ByteDance's TikTok has announced a significant restructuring of its United States operations, formalizing a deal to place its US business under a new entity named TikTok USDS Joint Venture LLC. According to a memo from CEO Shou Zi Chew to employees, the agreements have been finalized with three key managing investors: Oracle, Silver Lake, and the Abu Dhabi-based MGX. This new joint venture is scheduled to formally take charge of TikTok's US business following a deal set to close on January 22.

The structure of the new joint venture is designed to address US national security concerns. A consortium comprising Oracle, Silver Lake, and MGX will collectively hold a 50% stake in the US joint venture, with each firm owning 15%. Additionally, affiliates of certain existing ByteDance investors will hold 30.1% of TikTok's shares. ByteDance, TikTok's China-based parent company, will retain a 19.9% stake in the new entity. Chew emphasized that the new venture would be "majority owned by American investors, governed by a new seven-member majority-American board of directors, and subject to terms that protect Americans’ data and U.S. national security."

This transaction is a direct response to US national security legislation, including a Supreme Court upheld mandate in January requiring ByteDance to divest TikTok’s US operations or face an effective ban. The journey to this agreement began in 2020 when then-President Donald Trump first issued an executive order demanding the sale of TikTok’s US business, followed by President Joe Biden signing a law in September that established a framework for such a deal. Congress further reinforced this stance in 2024, passing legislation that threatened a nationwide ban if ByteDance did not sell the app to domestic owners. The agreement is largely seen as bringing closure to this prolonged political and legal dispute.

A critical aspect of the joint venture is the control over TikTok's data and security in the US. The TikTok USDS Joint Venture LLC will assume comprehensive responsibility for protecting US user data, securing TikTok’s recommendation algorithm, overseeing content moderation, and ensuring software assurance. According to Chew's memo, the entity will possess the "exclusive right and authority to provide assurances that content, software, and data for American users is secure." Oracle will play a central role beyond its investment, acting as the joint venture’s "trusted security partner" tasked with auditing and validating compliance with the "agreed upon National Security Terms." All sensitive US data will be stored exclusively in Oracle’s US-based cloud computing data centers.

Furthermore, the deal includes a specific plan for handling TikTok's core recommendation algorithm. The new entity will be responsible for retraining this algorithm using US user data. This move is aimed at addressing long-standing concerns among US lawmakers regarding potential foreign influence, by ensuring that the content feed is "free from outside manipulation." Once completed, this deal is expected to place TikTok’s US operations firmly under American oversight, allowing the platform to continue serving its millions of users nationwide while satisfying stringent security and data privacy requirements.