TikTok’s U.S. Operations to Transition into American Hands
In a significant shift in the digital landscape, TikTok has agreed to transfer its U.S. operations to a consortium led by American investors. This group includes Oracle, a major tech company headed by Larry Ellison, a known ally of former President Trump.
The restructuring will see TikTok’s U.S. algorithm managed by the new American entity, which will train it exclusively with data from American users. Additionally, content moderation, determining what is permissible on the platform, will be handled by this new U.S.-controlled organization.
Despite these changes, the primary algorithm will continue to be owned by ByteDance, the Beijing-based parent company of TikTok. This arrangement has been cleared by American auditors, as revealed in an internal TikTok memo and confirmed by sources familiar with the deal.
Anupam Chander, a Georgetown University law professor, noted, “With an American majority running the content moderation, concerns about foreign propaganda seem to have been alleviated.” However, he also emphasized the need for the U.S. content moderation team to allow speech that might not align with American owners’ preferences.
The new TikTok U.S. entity will be partially owned by a consortium of investors, including Oracle, Silver Lake, and the UAE-backed MGX. Collectively, they will control 45% of the operations. ByteDance’s existing investors will hold about a third, while ByteDance itself retains 20% ownership.
Governance of this new entity will fall to a seven-member board, predominantly comprised of Americans, as initially reported by Axios.
This development follows years of political pressure in Washington over TikTok’s Chinese ties, culminating in a 2024 law mandating the app’s sale or face a ban. The legislation was upheld by the Supreme Court earlier this year, although enforcement was delayed by executive actions from former President Trump.
Former Treasury official Jim Secreto criticized the deal, saying it does not completely sever ties with ByteDance as intended by Congress. He described the structure as more akin to a “franchise deal” rather than a full divestment, leaving national security concerns unresolved.
TikTok, with an estimated 2 billion users globally, will now operate a U.S. version under American oversight, distinct from the global version managed by ByteDance. This situation presents unique challenges in terms of data security and content regulation.
For Larry Ellison, this move extends his influence in the American media and entertainment sectors. He is also a key figure in the recently completed Paramount Skydance deal and is involved in a takeover bid for Warner Bros. Discovery, amid competition from Netflix, which has received support from Warner officials.
