Focus on the BIG picture.
Saturday, Dec 20, 2025
Outside the box.
TikTok Reaches U.S. Joint Venture Deal but Algorithm Control Could Strain U.S.–China Relations
Agreement averts a U.S. ban by transferring majority ownership to American investors, yet questions over core algorithm governance persist
TikTok has signed binding agreements to restructure its U.S. operations into a new joint venture as part of an effort to avert a nationwide ban and comply with U.S. national security mandates.
Under the deal, ByteDance—the Chinese parent company—will retain a minority stake capped at 19.9 percent, while a consortium of U.S. and international investors, including Oracle, Silver Lake and MGX, will hold the majority share of the newly formed TikTok USDS Joint Venture LLC.
The agreement, which followed years of political and legal uncertainty over the platform’s future in the United States, is expected to take effect on January 22, 2026, and aims to keep the app accessible to more than 170 million American users.
The joint venture will assume responsibility for U.S. data protection, algorithm security, content moderation and software assurance, and will be overseen by a board with a majority of American directors.
Oracle will play a key role in managing U.S. user data and the video recommendation algorithm, which will be retrained on domestic data to mitigate concerns about external manipulation.
However, the core intellectual property and technological underpinnings of TikTok’s algorithm remain a point of contention, with analysts noting that unresolved questions about licensing, control and Chinese regulatory influences could continue to challenge bilateral trust and regulatory confidence.
The deal follows the enforcement of the Protecting Americans from Foreign Adversary Controlled Applications Act, which had set a deadline for divestment or a ban.
Several extensions under the Trump administration delayed the ban’s implementation, giving negotiators time to reach this outcome.
While the arrangement satisfies U.S. foreign ownership requirements and ensures local data safeguards, critics argue that retaining ties to ByteDance and uncertainties around the algorithm’s governance may continue to unsettle U.S.–China relations, with some lawmakers advocating for clearer separations or more stringent oversight to fully address national security concerns.
Under the deal, ByteDance—the Chinese parent company—will retain a minority stake capped at 19.9 percent, while a consortium of U.S. and international investors, including Oracle, Silver Lake and MGX, will hold the majority share of the newly formed TikTok USDS Joint Venture LLC.
The agreement, which followed years of political and legal uncertainty over the platform’s future in the United States, is expected to take effect on January 22, 2026, and aims to keep the app accessible to more than 170 million American users.
The joint venture will assume responsibility for U.S. data protection, algorithm security, content moderation and software assurance, and will be overseen by a board with a majority of American directors.
Oracle will play a key role in managing U.S. user data and the video recommendation algorithm, which will be retrained on domestic data to mitigate concerns about external manipulation.
However, the core intellectual property and technological underpinnings of TikTok’s algorithm remain a point of contention, with analysts noting that unresolved questions about licensing, control and Chinese regulatory influences could continue to challenge bilateral trust and regulatory confidence.
The deal follows the enforcement of the Protecting Americans from Foreign Adversary Controlled Applications Act, which had set a deadline for divestment or a ban.
Several extensions under the Trump administration delayed the ban’s implementation, giving negotiators time to reach this outcome.
While the arrangement satisfies U.S. foreign ownership requirements and ensures local data safeguards, critics argue that retaining ties to ByteDance and uncertainties around the algorithm’s governance may continue to unsettle U.S.–China relations, with some lawmakers advocating for clearer separations or more stringent oversight to fully address national security concerns.
