TikTok Signs Urgent Deal to Transfer U.S. Operations to Oracle Group
URGENT UPDATE: TikTok has just signed a groundbreaking deal to transfer its U.S. operations to a consortium led by American investors, including the tech giant Oracle, run by Trump ally Larry Ellison. This pivotal agreement is set to finalize on January 22, 2024, as confirmed in a memo from TikTok CEO Shou Chew.
This transfer comes amid escalating bipartisan pressure from Washington regarding TikTok’s ties to China. The app, which boasts an estimated 2 billion users globally, has faced scrutiny over data privacy and national security concerns. Under the new arrangement, an American-led entity will gain oversight of TikTok’s extensive U.S. user data and its highly sophisticated algorithm, while the core algorithm itself will remain under the control of its Beijing-based parent company, ByteDance.
The consortium acquiring TikTok will include Oracle, private equity firm Silver Lake, and the UAE state-backed investment firm MGX, collectively holding 45% of the new U.S. entity. Existing ByteDance investors will hold approximately one-third, while ByteDance retains 20% ownership.
This deal follows a significant legislative backdrop: a 2024 law aimed at banning TikTok unless it was divested from Chinese control was upheld by the Supreme Court earlier this year. Consequently, TikTok faced potential violations of federal law for months, while executive actions during the Trump administration temporarily delayed enforcement of this law.
The newly formed entity will feature a seven-member board, predominantly comprising American members, tasked with ensuring compliance and data security. This dual-entity structure raises intriguing questions about content moderation and data protection, as one version of TikTok operates under U.S. oversight while the other continues its global operations under ByteDance’s management.
As the deal unfolds, it could reshape the landscape of social media in the U.S. and potentially influence regulatory frameworks for foreign-owned apps. TikTok’s massive user base in the U.S., though less than 10% of its global audience, still represents a significant market, making this transition critical for users and stakeholders alike.
Stay tuned for further updates on this developing story as TikTok prepares for this significant operational shift.
