In a significant development, TikTok's American division has formalized an agreement for its sale to an investment group primarily composed of U.S. entities, with software giant Oracle at the forefront. This transaction aims to mitigate long-standing concerns regarding data security and content governance within the United States. Under the new arrangement, the U.S. entity will assume responsibility for managing American user data and content moderation, although the underlying algorithm will continue to be owned and updated by its Chinese parent company, ByteDance, subject to auditing by American experts. This strategic move creates a dual operational structure for TikTok, with distinct management and oversight for its American and international user bases.
Details of the Acquisition and its Implications
On December 18, 2025, TikTok officially signed a definitive agreement to divest its U.S. operations to a consortium predominantly made up of American investors. This crucial transaction was primarily driven by Oracle, a prominent software company led by Larry Ellison, a known associate of former President Trump. The core objective of this divestiture is to place TikTok's highly engaging algorithm and the vast quantities of American user data it has amassed under the supervision of a newly formed U.S.-based entity.
A critical aspect of this deal stipulates that TikTok's U.S. algorithm will be re-calibrated exclusively using data from American users. Furthermore, all decisions pertaining to content moderation for the U.S. platform will be made by this new American entity. However, the overarching ownership and future updates of the algorithm will remain with Beijing-based ByteDance, the original developer, with the caveat that these operations will be subject to scrutiny by American auditors. This nuanced arrangement seeks to balance national security interests with the operational continuity of the popular platform.
According to the terms, the new U.S. TikTok entity will be 50% owned by a diverse group of investors. This group includes Oracle, the private equity firm Silver Lake, and MGX, a state-backed investment firm from the United Arab Emirates, collectively holding a 45% stake. Approximately one-third of the remaining shares in the newly formed U.S. operation will be held by existing investors of ByteDance, while ByteDance itself will retain around 20% ownership. A seven-member board of directors, predominantly American, will oversee the new entity's operations. This governance structure marks a significant shift in control, addressing the persistent bipartisan pressure from Washington that culminated in a 2024 law mandating the app's sale or face a ban, a law subsequently upheld by the Supreme Court in January.
This deal represents a notable triumph for Larry Ellison, further extending his family's influence across various sectors of American media and entertainment. Ellison is also a key backer of Paramount Skydance, a media conglomerate whose acquisition was finalized earlier this year. His son, David Ellison, who serves as the chairman and CEO of Paramount Skydance, has recently made a bid to acquire Warner Bros. Discovery, positioning him against streaming giant Netflix, which has also expressed interest and received endorsement from Warner's top officials.
This transaction effectively creates a bifurcated system for TikTok. The American version will operate under the guidance of a U.S.-backed company, benefiting from enhanced checks and balances on content flow and data security. Conversely, the global version of the app will continue to be fully managed by ByteDance, serving its estimated 2 billion users worldwide, with less than 10% residing in the U.S.
This acquisition highlights the complex interplay between technology, geopolitics, and national security. The deal underscores the U.S. government's resolve to safeguard its citizens' data and influence over crucial digital platforms. It also illustrates the evolving landscape of global technology, where international platforms must navigate diverse regulatory environments and national interests to maintain their presence. The creation of a separate U.S. entity for TikTok could set a precedent for other global technology companies facing similar scrutiny regarding their foreign ownership and data handling practices. This development will undoubtedly have lasting implications for the future of social media and cross-border digital operations.