TikTok closes deal to split US app from global business

TikTok has closed a deal that will allow the hugely popular short-video app to continue operating in the US, it announced on Thursday.

The deal comes after a years-long tussle between Washington and Beijing that began in Trump’s first term in the White House when he tried unsuccessfully to ban the app over national security concerns.

The platform was due to be banned in the US in January 2025 if its Chinese owner, ByteDance, failed to sell its US operations to American investors. But US President Donald Trump repeatedly postponed the enforcement of legislation to take down the app.

The main source of contention was the app’s powerful algorithm, which dictates the content recommended to users. Now that formula has been licensed to the app’s American owners and will be trained only on US data.

Experts say this will certainly produce changes, but how exactly it affects the 200 million Americans on the app remains unclear.

For years Washington has been pressuring TikTok to sell its US operations, citing national security concerns over its Chinese owner ByteDance.

Lawmakers had expressed fears that Beijing could force the firm to hand over US users’ data. Both TikTok and ByteDance have consistently denied the claim.

The idea of a TikTok ban, first floated by Trump during his first term in 2020, gained momentum under Joe Biden’s presidency. In 2024, Biden signed a law demanding that ByteDance sell TikTok or face a ban in the US.

A legal battle ensued between ByteDance and the US government, and in January last year the app went offline for US users for 12 to 14 hours. That temporary blackout was restored after Trump, then the president-elect, pledged to reverse the ban.

Last September, Trump announced that he had reached a deal with China to keep the app running in the US.

And in December, binding agreements were signed with American and global investors to operate TikTok’s business in the US, according to a memo from its chief executive Shou Zi Chew.

More details of this deal were outlined in TikTok’s latest announcement.

Under the agreement, a new business called TikTok USDS Joint Venture LLC will secure US user data, apps and algorithms through data privacy and cybersecurity measures.

Trump has weighed in on the deal, writing on social media that he was “so happy to have helped in saving TikTok”.

The BBC has contacted the White House and the China’s embassy in Washington for comment.

TikTok says the new joint venture will operate as an independent entity governed by a seven-member, majority-American board of directors.

Adam Presser, formerly of WarnerMedia, was appointed as the chief executive of the joint venture.

There are three managing investors for TikTok’s US operations, each holding a 15% stake:

• Oracle – the cloud computing giant chaired by Larry Ellison, a Republican megadonor and longtime Trump ally
• Silver Lake – a US tech investment firm that says it holds approximately $116bn in assets (£85.9bn)
• MGX – an Emirati investor in AI and technology

Oracle will be responsible for securing the data of TikTok’s American users and oversee the retraining of the app’s powerful content recommendation algorithm.

ByteDance will retain a 19.9% stake in the business.

The remaining 35.1% of the company is owned by a group of companies including the family office of tech executive Michael Dell – another Trump supporter – and Vastmere Strategic Investments, an affiliate of Susquehanna International Group.

Susquehanna was co-founded by Trump ally Jeff Yass, whose personal share in TikTok’s owner ByteDance was roughly 7% as of last year. Its managing director, Mark Dooley, will also be a member of the new firm’s board of directors.

The board will also include TikTok’s global boss Shou Zi Chew as well as executives from Oracle, Silver Lake and MGX.

This question is at the heart of the tussle over TikTok’s US operations. Its algorithm is the “secret sauce” that has driven the app’s huge popularity.

A former social media executive previously told the BBC that other companies have tried to re-create the algorithm, from Instagram’s Reels to YouTube’s Shorts, but they’re just not as good.

“Generally, the one who introduces the technology just knows how to do it better.”

ByteDance had initially refused to part with its prized formula – a stance backed by the Chinese government. But last September, Beijing’s top cybersecurity regulator signalled that Beijing could allow ByteDance to license the algorithm to a US company owner.

According to the deal, the algorithm will be retrained on US user data only, which will be protected to meet American regulations.

The algorithm will be “secured in Oracle’s US cloud environment”, TikTok said.

The impact of this shift will soon be felt by the millions of American TikTok users.

Experts say this might mean a slower, lighter app that operates differently from the global version. The algorithm might also not recommend content as successfully as the current platform.

Additional reporting by Koh Ewe