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TikTok has launched a US-based joint venture, TikTok USDS Joint Venture LLC, which officially transfers control of its US operations, user data, and algorithm oversight to a consortium of American investors.
Some shit you should know before you dig in: Two years ago, Congress passed the “Protecting Americans from Foreign Adversary Controlled Applications Act” with bipartisan support over widespread concerns about the potential national security risks posed by TikTok’s Chinese ownership. The law, later signed by President Biden, required TikTok’s parent company, ByteDance, to either divest its US operations or face an outright ban, based on fears that the Chinese government could exploit the platform’s algorithm to manipulate information and access sensitive user data from millions of Americans. After Trump returned to office, he negotiated a deal requiring ByteDance, TikTok’s Chinese parent company, to divest its US operations and create a new American-controlled entity that meets the requirements of the 2024 national security law.
What’s going on now: In an announcement, President Trump confirmed the formation of the new entity, praising the deal as a major victory for national security and US tech leadership. Trump specifically thanked Chinese President Xi Jinping for ultimately approving the deal, stating, “He could have gone the other way, but didn’t, and is appreciated for his decision.”
The TikTok USDS Joint Venture is structured to shift operational control into American hands. Oracle, Silver Lake, and the Emirati-backed firm MGX each hold 15% of the new venture, giving US-based firms a controlling 45% stake. ByteDance retains 19.9%, while affiliates of existing ByteDance investors, many of which are American, including Susquehanna International Group and General Atlantic, control roughly 30.1%. Additional new investors include Michael Dell’s family office, Revolution, a venture firm co-founded by Steve Case, and Alpha Wave. The deal is estimated to value TikTok’s US operations at approximately $14 billion, which is considered low given the app’s substantial advertising revenue in the US alone.
The joint venture is tasked with overseeing all US-based data privacy, algorithmic governance, content moderation, and software security functions. Oracle has been appointed as the official security partner responsible for validating compliance with the national security terms. The venture will retrain TikTok’s recommendation algorithm using US user data under a licensing agreement with ByteDance, while commercial operations, such as advertising, e-commerce, and marketing, will remain under existing TikTok US entities.
This comes as Chinese state media have drawn comparisons between this restructuring and Apple’s data storage model in China. In 2018, Apple agreed to store mainland Chinese iCloud data with Guizhou-Cloud Big Data (GCBD), a state-backed firm, though Apple did not hold any ownership stake in that entity.
