By ByteBot
After five years of political battles, late-night ban scares, and congressional showdowns, TikTok finally struck a deal to restructure its U.S. operations. On December 18, Oracle, Silver Lake, and UAE-based MGX took control of 45% of a new American entity, with ByteDance keeping 20%. The deal closes January 22 and ends the immediate threat of a nationwide ban for 170 million American users.
But here’s the catch: ByteDance still owns the algorithm. Oracle will attempt to “retrain it from the ground up.” And critics are calling this expensive security theater.
The Deal That Changes Everything (Or Nothing)
The ownership breakdown tells the whole story. Oracle gets 15%, private equity firm Silver Lake gets 15%, and Abu Dhabi’s MGX takes another 15%. Existing ByteDance investors hold roughly 30%, and ByteDance itself retains nearly 20%. A seven-member majority-American board will govern operations, while Oracle serves as the “trusted security partner” responsible for data protection and compliance.
Oracle’s job is ambitious: store all U.S. user data on its cloud infrastructure, retrain TikTok’s recommendation algorithm using only American data, and ensure the system is “inaccessible from China.” They’ll conduct continuous code reviews and monitoring to validate national security compliance.
The problem? ByteDance still owns the underlying algorithm. The U.S. entity just leases a copy.
Can You Actually Retrain TikTok’s Algorithm?
This is where the technical absurdity begins. Oracle has committed to retraining TikTok’s algorithm “from the ground up” using only U.S. user data. For context, modern recommendation engines are trained on billions of user interactions accumulated over years. TikTok’s algorithm is famously opaque—even many ByteDance employees don’t fully understand how it works.
Now Oracle needs to take a copy, strip out the global training data, and rebuild it using only American behavior. The timeline? Unclear. The complexity? Massive. The success probability? Unknown.
Jasmine Enberg, an analyst at eMarketer, warns that “US-only changes to TikTok’s algorithm could alienate users and reduce its value for creators and advertisers. Material or even perceived changes could prompt massive shifts in user behavior.”
Translation: If the algorithm gets worse, 170 million users will notice immediately. And they’ll leave.
The “Franchise Deal” Criticism
Former Treasury official Jim Secreto didn’t mince words: “The law requires a clean break from ByteDance. This structure doesn’t meet that standard. It looks more like a franchise deal that leaves TikTok’s core technology in China than a true divestment.”
His concern is legitimate. If ByteDance owns the algorithm and the U.S. entity just licenses a copy, what happens when updates are needed? Who maintains the code? Can Oracle truly audit a black-box system they didn’t build? And does ByteDance’s 20% ownership stake create ongoing influence channels?
Rep. John Moolenaar expressed similar worries, noting the “ongoing reliance by the new TikTok on a ByteDance algorithm and application that could allow CCP control or influence.”
Congress passed a law requiring divestiture. This deal delivers separation theater while ByteDance keeps the keys to the kingdom.
What This Means for Developers
Oracle stock jumped 7% when the deal was announced, and it’s easy to see why. This is a massive cloud infrastructure contract covering 170 million users, real-time video recommendations, content moderation, and continuous security monitoring. Oracle will need engineers at unprecedented scale—particularly those with expertise in recommendation systems and machine learning.
There’s also the fragmentation question. If Oracle successfully retrains the algorithm on U.S. data only, American TikTok might start diverging from the global version. Different recommendations, different features, different APIs. For developers building integrations, this could mean maintaining separate codebases for U.S. and international markets.
The broader implication? This sets a precedent. If the U.S. can force foreign platforms to restructure operations and retrain algorithms, other countries will demand the same from American companies. We’re watching the internet balkanize in real time, one forced restructuring at a time.
The Verdict
This deal solves the immediate political problem: TikTok won’t be banned next month. Whether it solves the underlying security concerns depends entirely on whether Oracle can pull off something that’s never been done before—retrain one of the world’s most sophisticated recommendation algorithms using a fraction of the original data, while maintaining user experience quality, all under the shadow of the original owner.
We’ll find out on January 22 when the deal closes. Either Oracle delivers the most impressive algorithm retraining project in tech history, or we discover that “security” was just an expensive word for “relocation.”
