TikTok gets a red, white, and blue coat of paint

TL;DR: The new TikTok US spinoff splits the baby—the algorithm gets more local and Oracle becomes the official chaperone of American user data, while ByteDance keeps the commercial cash machine. The winners: ByteDance and President Donald Trump’s closest allies. The losers: probably the rest of us.

What happened: It’s finally over. A little over a year after TikTok briefly went dark in the US over national security concerns tied to its Chinese ownership, the popular social media app is officially spinning off as an American entity. The new company—TikTok USDS Joint Venture LLC (catchy, right?)—will operate independently from Chinese parent company ByteDance.

The sale was a long time coming and happened in the nick of time. In April 2024, Congress gave ByteDance an ultimatum: Sell TikTok's US operations by January 19, 2025 or face a nationwide ban. After Trump took office, he signed executive orders delaying enforcement. The final deadline for this deal was yesterday.

The art of the deal: The $14 billion spinoff puts roughly 80.1% of TikTok US in the hands of (mostly) American investors, with ByteDance retaining 19.9%—conveniently just under the 20% cap mandated by law. Oracle (cofounded by Larry Ellison, one of Trump’s closest tech allies) and Silver Lake (an American private equity giant) are managing investors alongside MGX (an Emirati AI-focused investment fund), claiming 45% of the company. Another 35% goes to a mix of American firms, including ones connected to two more tech billionaire Trump backers, Michael Dell and Jeff Yass.

Rather than clean house, TikTok US tapped an insider to lead the new team: Adam Presser, formerly head of operations and trust and safety at TikTok, will serve as CEO. Shou Chew, TikTok global’s CEO (who got grilled by Congress in 2023), gets a board seat alongside key investors.

Why did this happen?: For years, Washington has worried that China could use TikTok to spy on Americans, harvest data on hundreds of millions of US citizens, or subtly manipulate the algorithm to push pro-China narratives. The new US company says the ownership change will "protect national security through comprehensive data protections, algorithm security, content moderation, and software assurances.”

What changes?: ByteDance will no longer have access to US user data—it’ll be stored on Oracle’s servers instead. While the Chinese company will license its famously addictive algorithm to the US entity, the new company has vowed to “retrain, test, and update the content recommendation algorithm on US user data.” No bias here, promise. Content moderation will also operate independently from TikTok global.

What doesn’t?: Most of what actually makes money appears to be staying in China. ByteDance will continue handling advertising and marketing for TikTok US, as well as run TikTok Shop—a rapidly growing revenue segment.

The reaction: Predictably mixed. Some are relieved their For You page isn’t going anywhere. Others are wary of how much influence this gives to Trump administration allies—while not doing enough to cut off ByteDance, which is now the biggest individual shareholder in TikTok US. Last year’s brief blackout sent millions scrambling to alternatives like RedNote (a popular Chinese social media app) and Instagram Reels. But for now, Americans can keep consuming their endless feed of news commentary, absurd comedy skits, and viral food trends that made TikTok such a coveted prize in the first place. —WK

This deal is a win for ByteDance: It will keep and license the algorithm instead of selling it and continue to run TikTok's commercial activities, and the political risk that restrained it is gone. Also, it's an insane bargain for the US investors. The deal values TikTok US at around $14 billion. But TikTok US makes roughly $14 billion annually in advertising revenue alone. —BM