TikTok Forms US-Owned Joint Venture With Oracle and Silver Lake Amid Ban Concerns

ByteDance has finalized a deal to create a US-controlled joint venture for TikTok operations in America, concluding a six-year regulatory battle that threatened to ban the app nationwide. The new entity, TikTok US Data Security (USDS), sees Oracle, Silver Lake, and Abu Dhabi sovereign fund MGX each acquiring 15% stakes, while Dell Technologies' family office takes an undisclosed position. ByteDance retains 19.9% ownership – just below the 20% threshold that would trigger national security reviews under US regulations.

Adam Presser, TikTok's former head of operations and trust and safety, will serve as CEO of the new entity. TikTok CEO Shou Chew joins the board alongside representatives from each investor group. The arrangement values TikTok's US operations at approximately $14 billion, aligning with analysts' estimates of its annual advertising revenue.

Structural Changes vs Operational Reality
The ownership shift creates a US-majority governed entity on paper, but technical implementation details remain critical. Oracle will continue hosting US user data through its cloud infrastructure, while TikTok's recommendation algorithms – previously developed by ByteDance engineers in China – now undergo source code audits by newly established US-based technical teams. Early documentation suggests algorithmic modifications will be implemented within six months to localize content ranking systems.

Persistent Concerns
National security experts note ByteDance's retained board seat and algorithmic influence create ongoing oversight challenges. The Committee on Foreign Investment in the United States (CFIUS) will maintain audit rights for five years, requiring quarterly demonstrations of data segregation protocols. Technical limitations emerge in content moderation systems, which continue sharing anonymized metadata with ByteDance's global abuse detection infrastructure – a necessity for combating cross-platform harmful content but a potential vector for data leakage.

Market Implications
The deal prevents immediate disruption to TikTok's 170 million US users but imposes operational constraints. Advertising partnerships now require dual approval from both TikTok global and USDS leadership, potentially slowing campaign deployments. Creator monetization tools face restructuring to comply with US financial regulations, with payment processors requiring direct contracts with the US entity.

Full implementation is projected through 2026, with the TikTok Transparency Center publishing quarterly compliance reports. The arrangement sets precedent for international tech operations amid geopolitical tensions, though its long-term viability depends on sustained technical enforcement of data governance boundaries.

Image: TikTok's US headquarters in Los Angeles (Credit: FT)