By TikTok signed a binding deal on December 18 to hand operational control of its U.S. business to Oracle, Silver Lake, and Abu Dhabi-based MGX, each holding 15% of a new joint venture. The $14 billion arrangement keeps the app alive for 170 million American users while ByteDance retains 19.9%—just under the 20% threshold that would trigger the ban. Oracle’s stock jumped 7% on the news. The deal closes January 22, 2026.
The Structure: American Majority, Chinese Minority
The new entity, dubbed “TikTok USDS Joint Venture LLC,” splits ownership strategically. Oracle, Silver Lake, and MGX collectively hold 45%. Existing ByteDance investor affiliates control 30.1%. ByteDance keeps 19.9%—a number chosen specifically to comply with the Protecting Americans from Foreign Adversary Controlled Applications Act, which bans apps more than 20% owned by “foreign adversaries.”
It’s clever math. American investors hold the majority (51%+), satisfying the law’s letter. ByteDance doesn’t lose the asset entirely, keeping nearly one-fifth ownership. A seven-member board with majority American directors will govern operations. On paper, this resolves a three-year standoff that started when Congress first threatened to ban TikTok over national security concerns.
Oracle Becomes TikTok’s $14 Billion Babysitter
Oracle’s role goes beyond passive investor. The company will serve as “trusted security partner,” responsible for three critical functions: storing all U.S. user data in its cloud infrastructure, retraining TikTok’s recommendation algorithm “from the ground up” using only American user data, and auditing compliance with “National Security Terms” to ensure the content feed stays free from foreign manipulation.
Here’s the technical challenge: ByteDance still owns the algorithm IP. The U.S. entity will lease a copy and retrain it exclusively on domestic data by the January close date. For context, this means rebuilding the AI/ML engine that keeps 170 million users scrolling for hours—a massive infrastructure undertaking compressed into weeks. Can they replicate TikTok’s addictive recommendation system without Chinese data? That’s Oracle’s $14 billion question.
This builds on Project Texas, Oracle’s existing partnership with TikTok since 2022 that routes U.S. user data through Oracle Cloud. The earlier effort involved a $1.5 billion investment, but the Biden administration rejected it as insufficient because it didn’t change ownership. This deal does—barely.
Critics Call It a Franchise Deal, Not True Divestment
Jim Secreto, a former Treasury official who worked on TikTok policy during the Biden administration, isn’t buying it. “This structure doesn’t meet that standard,” he told NPR. “It looks more like a franchise deal that leaves TikTok’s core technology in China than a true divestment.”
He’s got a point. ByteDance retains 19.9% ownership plus ownership of the algorithm—the secret sauce that makes TikTok compulsively watchable. Republican lawmakers echo this skepticism, arguing the arrangement maintains “operational relationship” between ByteDance and the U.S. entity despite the law’s intent to sever ties completely.
Oracle becomes the middleman monitoring everything, but ByteDance still owns the code that decides what Americans see. Is that a national security solution or expensive security theater? The law says apps can’t be more than 20% foreign-owned. ByteDance sits at 19.9% and keeps the algorithm. It passes the test legally while arguably failing it philosophically.
What This Means for Users, Developers, and the Industry
For TikTok’s 170 million U.S. users, nothing changes immediately. The app stays functional, the algorithm (theoretically) keeps working, and the January 19 ban deadline disappears. For developers building on TikTok’s API—tools like Adobe Premiere Rush, PicsArt, and various creator economy platforms—there’s potential uncertainty. Ownership transfers can bring new developer agreements, modified rate limits, or adjusted data access policies.
Oracle wins big. Securing TikTok as a long-term cloud customer is a major contract, explaining the 7% stock jump. The company positions itself as a geopolitical intermediary capable of satisfying U.S. security requirements while maintaining business relationships with foreign companies.
The broader industry is watching because this sets precedent. It’s the first major forced divestiture of a Chinese tech company operating in the U.S., establishing a template for how Washington handles foreign-owned platforms going forward. Other apps with Chinese ownership—RedNote, WeChat—are taking notes.
Open Questions Before January 22
The deal faces hurdles. Legal challenges could argue it doesn’t truly satisfy the law’s intent. China might block ByteDance from licensing the algorithm under export control regulations. The technical timeline is aggressive—can Oracle actually retrain the algorithm in time?
But assuming it closes as planned, we’ll have an answer to a fascinating question: Can you separate a social media platform from its parent company while the parent retains the core IP? ByteDance is betting yes. Critics are betting no. Oracle’s getting paid either way.
For now, TikTok survives. Whether this is a genuine security solution or an elaborate workaround remains to be seen.
