In a landmark move that ends years of legal and political uncertainty, TikTok CEO Chew Shou Zi informed employees on Thursday that the company has signed a binding agreement to divest its US entity into a joint venture controlled by a consortium of American investors.
The deal, which has received the backing of US President Donald Trump, effectively averts a looming nationwide ban and secures the platform’s future for its 170 million American users.
The new entity, named TikTok USDS Joint Venture LLC, is set to come into effect on January 22, 2026.
The deal restructures TikTok’s ownership to comply with US national security rules on data privacy and foreign influence.
“The US joint venture will be responsible for US data protection, algorithm security, content moderation and software assurance,” Chew said in an internal memo seen by the South China Morning Post.
“It will also have the exclusive right and authority to provide assurances that content, software and data for American users is secure.”
Chew added that a “trusted security partner will be responsible for auditing and validating compliance with the agreed upon National Security Terms, and Oracle will be the trusted security partner upon completion of the transaction”.
Under the new arrangement, a consortium of American and allied investors, including Oracle, Silver Lake and Abu Dhabi-based MGX, will hold 50 per cent of the US entity, with each owning 15 per cent. Affiliates of existing ByteDance investors will hold 30.1 per cent, while ByteDance, the original Chinese parent company, will retain 19.9 per cent.
Under the deal proposed by Washington, ByteDance will license its AI recommendation technology to the newly created US TikTok entity, which will use the existing algorithm to retrain a new system that Oracle secures.
In the memo, Chew said that the US venture would oversee algorithm security by “retraining the content recommendation algorithm on US user data to ensure the content feed is free from outside manipulation”.
Asked if the deal had Beijing’s blessing, spokesman for China’s foreign ministry Guo Jiakun said “China’s position on TikTok is consistent and clear”, without further clarification.
However, Guo said in September that China “respects the will of enterprises and welcomes them to conduct commercial negotiations based on market principles, and reach solutions that comply with Chinese laws and regulations”.
Rush Doshi of the Council on Foreign Relations, a think tank in New York, said that while a TikTok deal now exists, major questions remain over who ultimately controls the algorithm.
“They say it will be trained on US data. Great, but has the algorithm been transferred, licensed, or is it still owned and controlled by Beijing – with Oracle merely providing monitoring?” he said on social media.
Ryan Monarch of Syracuse University in New York described the development as an “expected outcome after the successful meeting between Presidents Trump and Xi in October that lowered tensions and restored some of the key trade links between the US and China”.
He added that it is “likely that the algorithm for the US-based version of TikTok will not change substantially from its successful business model even with the new joint venture”.
In 2024, the US Congress approved a nationwide ban on TikTok unless ByteDance sold its controlling stake by January 19, 2025.
The sale-or-ban law, signed by then-President Joe Biden, allowed for a one-time 90-day extension of the original shutdown deadline if “significant” progress towards a sale was evident. Trump has since extended the deadline five times, most recently to January 23, 2026.
Trump made his first extension on January 20 this year – his first day in office – after the platform briefly went dark in the wake of the US Supreme Court’s decision to uphold the law only days earlier.
The second was in April, when White House officials believed they were close to a deal to spin off TikTok into a new company with US ownership. But that plan fell apart after Beijing reportedly backed out following Trump’s decision to hike tariffs on Chinese imports.
In September, officials from both countries said they had reached a “framework” for addressing the app following trade talks in Madrid, after which Trump signed an order declaring that a deal regarding the app’s future met the national security requirements mandated by law.
A meeting between Trump and Chinese President Xi Jinping in late October concluded without any details shared about any deal.
Under Chinese export controls, some technologies used by TikTok, including its recommendation algorithm, require Beijing’s approval for export. Beijing implemented the restriction in 2020, killing a deal under negotiation among ByteDance, Oracle and Walmart during the first Trump administration.
The law mandating the sale, passed as part of a bipartisan foreign aid package, reflects Washington’s concern that TikTok’s ownership makes it beholden to the Chinese government and that Beijing could use the app to spy on Americans or conduct influence operations.
TikTok, along with free speech advocates and some US lawmakers, has argued that a ban would unlawfully restrict Americans’ access to foreign media and violate the First Amendment. Some US lawmakers have also pointed to the lack of evidence that Beijing has manipulated the platform’s content.
In August, the White House debuted the second Trump administration’s first TikTok account. Both Trump and Biden launched accounts during the 2024 presidential campaign despite concerns about the app’s security.
Critics, including some lawmakers, have since raised alarm that any deal with Beijing would not meaningfully restrict its control over the app, with some pushing for zero ByteDance ownership despite the law setting the threshold for control at 20 per cent or more.
