Investor groups including Oracle, Silver Lake, and Andreesen Horowitz are nearing a deal to take control of TikTok’s U.S. operations as President Trump extends the deadline for a potential ban on the app until December 16th.
In a notable turn in the ongoing discussions about TikTok’s future, a consortium of U.S. investors is finalizing an agreement that would grant them majority control of the app’s operations in the United States. This group, which features the tech giant Oracle among others, is anticipated to own an 80% stake in the new U.S.-based entity, leaving 20% for Chinese stakeholders.
The deal, currently under negotiation in Madrid, will also establish a U.S.-controlled board, including one member appointed by the U.S. government. Current TikTok users in the U.S. will need to transition to new applications that are being developed and tested by TikTok engineers. This new application is said to employ a content commenting algorithm that is based on technology licensed from ByteDance, TikTok’s parent company.
The TikTok algorithm is a focal point in discussions with Chinese representatives due to concerns from American parents and grandparents over the platform’s effects on mental health. There are deep concerns illustrated in, well, a book by Peter Schweizer, a contributor at Breitbart, which explores the perceived risks of TikTok.
Schweizer has shared insights from his book, highlighting the complexities surrounding the deal:
He noted that if China were to resist the sale, it’s a matter of the algorithm being regarded as state secrets, rather than just typical business secrets. The Chinese government has referred to the app as a “modern Trojan horse” and part of an information warfare strategy against the West. His work reveals connections between ByteDance and Chinese intelligence about how to influence online behavior.
“China has been studying this for years,” he adds.
In the proposed agreement, Oracle would manage user data at its facility in Texas, addressing security concerns raised by U.S. officials about potential risks tied to the app. Insiders have indicated that past efforts to safeguard American data from China have been largely superficial.
President Trump, who had threatened to implement a ban on TikTok due to worries over national security, has postponed the deadline as discussions continue. Outside the White House on Tuesday, Trump remarked: “I’ll check everything on Friday.”
This framework for the contract has been in the works since the early part of the year, with negotiations kicking off in January. The agreement would permit TikTok to continue operating within the U.S. while adhering to laws established last year that required the company to either make contracts or cease operations in the country.
If the deal goes ahead, it could resolve the ongoing uncertainty regarding TikTok’s presence in the U.S. Meanwhile, ByteDance, TikTok’s parent company, has reported a revenue increase of about 25% to $91 billion in the first half of this year, with a quarter of that revenue coming from outside China. The company saw its internal valuation soar to roughly $330 billion, hitting this peak in August amid stock buyback attempts.
Please read more in the Wall Street Journal.
