After years of political wrangling and legal battles, TikTok has finalised a deal to form a new U.S.-based entity, allowing the popular video-sharing platform to continue operating for its more than 200 million American users.
The company announced Thursday that TikTok USDS Joint Venture LLC has been established to comply with federal requirements, marking a dramatic conclusion to concerns over national security and Chinese government influence that have plagued the app since 2020.
The Ownership Structure
American entities will hold 80.1% of the new joint venture, with ByteDance retaining 19.9%, just below the 20% threshold that would have triggered the ban. The managing investors include Oracle, Silver Lake, and Abu Dhabi-based MGX, each holding a 15% stake.
Additional investors control another 35%, including Michael Dell’s family office and Susquehanna International Group. Adam Presser has been appointed chief executive officer of the new joint venture, while TikTok’s global CEO Shou Zi Chew maintains a board seat.
Background and Legal Battle
The saga began when Congress passed bipartisan legislation in April 2024, signed by President Biden, requiring ByteDance to divest from TikTok or face a nationwide ban. The law reflected longstanding concerns that Beijing could compel ByteDance to share American user data or manipulate the platform’s powerful recommendation algorithm.
The ban went into effect on January 19, 2025, and for several hours, TikTok actually went dark. However, President Trump, who took office the next day, signed an executive order halting enforcement for 75 days while pursuing a sale agreement.
Key Security Measures
The new entity promises comprehensive security safeguards. U.S. user data will be stored in a domestic cloud environment under Oracle, with robust privacy and cybersecurity measures in place. The recommendation algorithm will also be secured within Oracle’s American cloud infrastructure.
Crucially, the content recommendation formula will be retrained, tested and updated on U.S. user data, addressing one of lawmakers’ central concerns about potential Chinese influence over American content consumption.
Lingering Questions
Despite the deal’s completion, significant questions remain about whether the arrangement truly meets Congress’s intent. The law specifically prohibits operational relationships between new owners and ByteDance, including algorithm cooperation. Yet ByteDance will license the algorithm to the U.S. entity for retraining, raising concerns about the extent of separation.
Some lawmakers have already signaled they will scrutinize whether ByteDance’s 19.9% stake and continued algorithm involvement comply with the law’s spirit. Meanwhile, users, creators, and advertisers are watching to see if algorithm changes affect content reach and monetisation.
For now, TikTok has survived the political storm. The platform’s 7.5 million business users and vast creator economy can breathe easier, though the transition’s long-term impact on the user experience remains to be seen.
