TikTok has agreed to sell assets in the US to US investors. Who benefits from this?

ByteDance, the Chinese owner of TikTok, has signed agreements to transfer its $14 billion U.S. division to a joint venture with a controlling stake owned by U.S. investors. This puts an end to TikTok's years-long standoff with the US authorities, who threatened to block the social network in the interests of national security. Oracle will guarantee the protection of user data, which will be able to store it in its data centers.

ByteDance and TikTok have signed binding agreements with three managing investors - Oracle, Silver Lake and MGX - to form a new joint venture, TikTok USDS Joint Venture LLC, to operate the social networking app in the US. According to Axios, citing an internal memo from TikTok CEO Zhou Shouzi, the deal is expected to go through on January 22. According to Axios, the parties valued TikTok's U.S. unit at about $14 billion.

According to the terms, the US and international partners will gain control over 80.1% of the JV's shares. A consortium of new investors will collectively own a 50% stake in the structure, with Oracle, Silver Lake and MGX each receiving 15%. Another 30.1% will go to affiliates of ByteDance's existing shareholders. ByteDance itself will retain 19.9%, Reuters reports, citing the same note.

The JV will be responsible for U.S. data protection, algorithm security, content moderation and software quality. Oracle will act as a "trusted security partner" responsible for auditing and storing Americans' sensitive data in the cloud in the US. Despite the divestiture, TikTok structures will continue to manage "global product interoperability and certain commercial activities, including e-commerce, advertising and marketing," emphasized the head of TikTok. At the same time, the majority of seats on the JV's board of directors will be held by Americans, while ByteDance will appoint only one of the seven board members.

Oracle shares jumped by 5.4% on the post-market of the New York Stock Exchange. During over-the-counter trading on the Blue Ocean ATS platform, the growth of quotations accelerated to almost 7%. They could be additionally supported by Oracle's announcement of cooperation with the U.S. Department of Energy on the new White House initiative "Mission Genesis". The mission is to bring together supercomputers, experimental facilities, neural networks and scientific databases to double the productivity of research and innovation in the U.S. in the next decade.

A day earlier, Oracle's securities came under serious pressure due to the collapse of a deal with investment firm Blue Owl Capital to finance a new $10 billion data center project. Blue Owl's "growing concerns" about Blue Owl's "rising debt and artificial intelligence costs" increased investor doubts about the validity of Oracle's multibillion-dollar spending on data center construction.

U.S. President Donald Trump first demanded ByteDance sell off its U.S. assets in 2020. In 2024, Congress passed a law banning the app unless it was sold. However, Trump's subsequent executive orders repeatedly delayed the law's enactment while his administration tried to negotiate a deal, Axios recalls.

This article was AI-translated and verified by a human editor