TikTok Signs Joint Venture Deal: What This Means for Investors and Businesses Facing the US Ban Threat
TikTok has announced a joint venture agreement with investors that will enable the company to continue operating in the United States and avoid a potential ban linked to its Chinese ownership. This development concludes a prolonged dispute over the popular video-sharing app in the U.S., where TikTok reports more than 170 million users.
According to an internal memo obtained by AFP, TikTok CEO Shou Chew informed employees that the social media firm and its Chinese parent company, ByteDance, have agreed on the structure of the new entity. Major investors in the joint venture include Oracle, Silver Lake, and Abu Dhabi-based MGX. Notably, Oracle’s executive chairman, Larry Ellison, is known as a long-standing ally of former U.S. President Donald Trump.
Chew explained in the memo that the U.S. joint venture will oversee critical areas such as U.S. data protection, algorithm security, content moderation, and software assurance. This entity will have exclusive authority to guarantee the security of content, software, and data related to American users.
The ownership breakdown assigns half of the U.S. venture to a consortium of new investors, with Oracle, Silver Lake, and MGX each holding 15 percent. Existing ByteDance affiliates will hold just over 30 percent, while ByteDance itself will retain slightly under 20 percent—the maximum permitted for a Chinese company under U.S. regulations.
The TikTok Global U.S. entities will also handle global product interoperability and specific commercial activities, including e-commerce, advertising, and marketing. Chew noted that additional steps are required to finalize the deal by the January 22 closing date.
This arrangement responds to legislation enacted under President Joe Biden’s administration, which mandates ByteDance either divest TikTok’s U.S. operations or face a ban in its largest market. U.S. officials, including Trump during his first term, expressed concerns that China could exploit TikTok to collect data on Americans or wield influence through its advanced algorithm.
Trump has postponed enforcement of this law through multiple executive orders, most recently extending the deadline to January. The new deal aligns with a White House announcement from September, confirming a framework agreed upon with China to comply with the 2024 legislation.
After the September announcement, Trump commented, “If I could make it 100 percent MAGA I would, but it’s not going to work out that way, unfortunately.” He also singled out Oracle’s Larry Ellison as a key figure in the deal.
Ellison, one of the world’s wealthiest individuals, has gained renewed attention through collaborations with Trump, notably in AI initiatives with OpenAI. Additionally, Ellison has supported his son David’s recent acquisition of Paramount and is involved in the latter’s ongoing bid against Netflix for Warner Bros.
China’s Foreign Ministry spokesman, Guo Jiakun, did not directly comment on the deal but reiterated Beijing’s firm stance on the TikTok issue as “consistent and clear.” ByteDance has yet to provide an official statement.
Industry experts view the agreement as a significant compromise that preserves ByteDance’s access to the lucrative U.S. market. Li Chengdong, founder of the Chinese tech consultancy Dolphin, said, “Keeping the U.S. operation live is itself a victory” for ByteDance.
— AFP
Special Analysis by Omanet | Navigate Oman’s Market
TikTok’s joint venture with US and Abu Dhabi investors to maintain its American operations signals a strategic shift in global tech partnerships and highlights the increasing importance of data security and regulatory compliance. For businesses in Oman, this creates opportunities to explore cross-border tech collaborations and leverage evolving digital platforms while being mindful of geopolitical risks. Smart investors and entrepreneurs should consider the growing role of data privacy governance and international joint ventures as keys to sustainable growth in the digital economy.
