The years-long saga over the future of TikTok’s American operations has finally reached a conclusion. The social media platform said on Jan 23 that its US arm has been bought by a consortium led by Oracle, formalising the deal outlined by the Trump administration in September.
The sale is designed to comply with a national security law signed in 2024 by then-US president Joe Biden, the Protecting Americans from Foreign Adversary Controlled Applications Act, which mandates that the Chinese owner ByteDance reduce its ownership of TikTok US to less than 20 per cent.
The law gave ByteDance an ultimatum: divest majority control of TikTok US by Jan 20, 2025, or the app would be banned nationwide. US President Donald Trump extended this deadline multiple times after reentering office, most recently pushing it out to January 2026.
While the deal looks set to resolve a long-running flashpoint between the world’s two largest economies and eliminate a complicating factor in broader talks over trade, China’s government has yet to comment on the transaction.
The new setup will likely have ramifications for the US social media landscape, too, where rivals including Meta Platforms and Alphabet’s Google are jostling for market share. TikTok is used by about 200 million Americans.
Who will own TikTok in the US?
TikTok says that it has officially established a US entity with three “managing investors”: Oracle, private equity firm Silver Lake Management and Abu Dhabi-based investment company MGX, each with a 15 per cent stake.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
Other investors in the consortium, including the family office of Michael Dell, founder and chief executive officer of Dell Technologies, together own 5 per cent. Existing ByteDance investors control 30.1 per cent of the new company, while ByteDance holds 19.9 per cent, in accordance with the law.
The new entity will be responsible for moderating content on TikTok and protecting the data of US users. It will be governed by a new, seven-member, majority-American board. TikTok’s chief executive officer Shou Chew, who will continue running ByteDance’s most valuable asset globally, will have a seat on the board. Adam Presser, who was TikTok’s head of operations, trust and safety, will helm the US venture as its CEO.
Oracle, already a longtime TikTok cloud computing partner, will serve as a security guard charged with ensuring TikTok complies with the law.
SEE ALSO
ByteDance is expected to maintain control over valuable parts of its US TikTok business, including its advertising division and fast-growing e-commerce arm TikTok Shop.
Critics have argued that the new joint venture arrangement does not adequately adhere to the 2024 US national security law, although it’s unclear whether they will challenge the deal. The law stipulates that ByteDance can have no operational relationship with US TikTok.
TikTok says that the new entity has been established in compliance with Trump’s September executive order.
What will happen to TikTok’s algorithm?
TikTok’s breakout success came off the back of its algorithm, which feeds content to users based on their recent activity and interests in order to keep them scrolling.
The new US entity “will retrain, test and update the content recommendation algorithm on US user data”, TikTok said. The algorithm will be secured in Oracle’s US-based cloud environment, it added.
The Trump administration outlined other details about the deal – before its completion – in September that weren’t mentioned in TikTok’s latest announcement.
A White House official said at the time that the owners of TikTok US would lease a copy of the algorithm from ByteDance and that ByteDance would neither have access to information on TikTok’s US subscribers nor retain any control over the algorithm in the US.
How much will TikTok US be worth?
US Vice President JD Vance said in September that the deal would value TikTok US at roughly US$14 billion. That’s far below previous estimates of the worth of ByteDance’s most lucrative business outside of China, which have ranged between US$35 billion and US$50 billion.
Valuing TikTok’s US operations has always been difficult, particularly given the complexity of the app’s coveted content algorithm. But even by the most conservative estimates, the business generates more than US$10 billion of revenue per year – though that’s not enough to be profitable.
ByteDance is on track to generate around US$50 billion in profit in 2025.
At a US$14 billion valuation, TikTok US would then carry a price-to-sales ratio of roughly 1.4 times, putting it in line with mature, low-growth companies such as oil major ExxonMobil and food giant General Mills. Instagram operator Meta and Google parent Alphabet trade at more than eight times sales.
Why has there been so much attention on TikTok’s US operations?
TikTok ranks among the most popular social media platforms in the US by daily active usage, rivalling the likes of Alphabet’s YouTube and Meta’s Instagram. That level of engagement makes it a lucrative business, and advertisers are eager to capture the attention of the video app’s vast user base.
As Trump himself has repeatedly emphasised, TikTok has become a cultural force among a younger, Gen-Z audience. The longer-term potential for newer offshoots such as TikTok Shop to challenge Amazon.com and Walmart in e-commerce is also appealing to investors.
TikTok is arguably among the most successful overseas forays by China’s tech sector, which in past years have been circumscribed by geopolitical tensions.
For ByteDance, a more than US$400 billion startup that’s China’s most valuable private company, TikTok drove a worldwide revenue expansion in 2024 that helped offset an economic downturn in China. Even with the new TikTok US joint venture in place, ByteDance could still retain around 50 per cent of the profit from these operations, sources familiar with the matter said in September.
Why did the US give ByteDance an ultimatum?
US lawmakers have long been concerned that TikTok could be used to spy on American citizens. This stems from the fact that China requires its companies, upon request, to share any national security-related data with its government. TikTok says it has not been asked to provide such data to the Chinese government and would not do so if asked.
US officials have also worried that China’s government could abuse the data of US TikTok users, for example, by collecting dossiers of personal information for blackmailing purposes. There’s also fear that TikTok could use its algorithm to manipulate the type of videos users see to divide Americans or spread propaganda favourable to Chinese officials in Beijing.
TikTok sought to counter these concerns by migrating the storage of US users’ data to US-based cloud servers operated by Oracle in 2022. However, those efforts failed to assuage lawmakers and national security officials. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
