TikTok announces JV to divest US business from Chinese parent: How deal sidesteps US ban

The final deal is expected to be completed on January 22, 2026, and awaits the approval of Chinese regulators.

What the joint venture entails

The US joint venture will now operate as an independent entity that will control data protection, content moderation and algorithmic security into the country, according to the memo. A new seven-member American board of directors will govern the US entity.

The joint venture will be responsible for “retraining the content recommendation algorithm on U.S. user data to ensure the content feed is free from outside manipulation.”

The memo makes Oracle the trusted security partner responsible for auditing and validating compliance with the agreed upon National Security Terms upon completion of the transaction.

According to a Bloomberg report, the new deal aligns with the one announced by the White House in September, which valued TikTok’s US business at roughly $14 billion. According to the memo, Oracle, Silver Lake and MGX would each receive 15% of the ownership, while ByteDance would retain 19.9%. Affiliates of existing investors would retain 30.1% ownership.

ByteDance still enjoys some control

According to the memo shared on Thursday, ByteDance would potentially retain oversight of some key parts of TikTok US and receive 50% of the profit from the US business. In the version of the deal presented in September, the new joint venture is expected to use ByteDance’s licensed AI recommendation technology and use the existing algorithm to retrain a new system on American data secured by Oracle, its cloud partner.

ByteDance’s continued involvement in the deal had delayed progress on a potential deal. Former US president Joe Biden had ordered that ByteDance maintain no operational relationship with TikTok US, while Republican legislators too had expressed doubt whether a deal including ByteDance would be held as legally valid.

TikTok was first incorporated in California in April 2015, and the app is owned by TikTok LLC, a limited liability company incorporated in Delaware and based in Culver City, California. However, the LLC is controlled by TikTok Ltd, which is registered in the Cayman Islands and based in Shanghai, which in turn is owned by the Beijing-based ByteDance Ltd. China’s unique political structure, with very little distinction between the Communist Party and the Chinese state, has also been a major concern. In theory, ByteDance could be coerced into sharing app data demanded by the state.

Concerns about Oracle’s role

The new arrangement makes Oracle the data security guard, and is significant given Oracle CEO Larry Ellison’s friendship with Donald Trump. Ellison has been under increased scrutiny of late, given his involvement in Paramount Skydance’s hostile takeover bid of Warner Bros. Discovery.

The present deal draws parallels with the Project Texas arrangement, announced in 2023, which saw Oracle partnering with TikTok to resolve the longstanding ownership concerns. However, Project Texas was shelved, with the US government holding it insufficient to address issues of national security.

Since 2022, TikTok has spent over $2 billion to migrate the storage of US user data to cloud servers hosted and operated by Oracle. However, lawmakers have not been convinced of the efficacy of this move. If the present deal is finalised, Oracle would monitor the app for safety and work closely with the US government. There would reportedly be controls to ensure that all app data remains free from the control of foreign adversaries, including China. The deal announced by the White House in September ensures that ByteDance would not have access to TikTok’s US subscribers or control the algorithm in the US.

Impact on China-US relations

The concerns on TikTok’s ownership date back to 2020, when Trump accused the app of mishandling the Covid pandemic and spreading conspiracies about the origins of the virus. He went on to sign an executive order demanding ByteDance sell its US operations.

In December 2022, the FBI raised national security concerns about TikTok. Then FBI director Chris Wray claimed that the Chinese had the ability to control the app’s recommendation algorithm, “which allows them to manipulate content, and if they want to, to use it for influence operations.” There was concern that the Chinese government could strongarm ByteDance into sharing with it the sensitive personal data of over 170 million American users, or otherwise share pro-Chinese propaganda.

Taking this a step further, the US Congress passed an act to force the sale of TikTok’s US business last May. After winning the 2024 presidential election, Trump moved the Supreme Court to pause the potential TikTok ban from going into effect until they could pursue a “political resolution” to the issue. In January 2025, the top court upheld the ban, leading to a few days of the app going dark in the US that month.

Trump has extended this deadline several times since, with the latest deadline set for January 2026.

TikTok has continued to operate in the US even as a ban by the Trump administration became less likely, and has now pivoted into e-commerce and live-streaming shopping, even partnering with Amazon.

The deal, once realised, would resolve a major impediment to US-China relations, which have been marred by the issue of the sale.