TikTok has signed a deal to spin-off its U.S. operations to a group controlled by mostly American investors, including software giant Oracle, a company run by billionaire Trump ally Larry Ellison.
TikTok's hyper-engaging algorithm and the massive amount of data the app has collected on millions of Americans is set to be overseen by the new U.S. firm. According to the agreement, TikTok's U.S. algorithm will be retrained with only Americans' data. Content moderation rules around what is permitted and what is not will be set by the new investor-controlled entity.
Yet the underlying algorithm will still be owned by Beijing-based ByteDance, with the blessing of American auditors, according to an internal TikTok memo reviewed by NPR and two sources familiar with the deal who were not authorized to speak publicly.
"With an American majority running the content moderation, concerns about foreign propaganda seem to have been alleviated," said Anupam Chander, a professor of law and technology at Georgetown University who studies the regulation of new technology. "But it is possible that the American TikTok might end up censoring or hiding speech that is permissible on the global TikTok platform. I would hope that the U.S. content moderation team would allow speech that the American owners might dislike."
Under the terms of the sale, half of the new entity that will control the American version of TikTok will be owned by a consortium of investors including Oracle, private equity firm Silver Lake and United Arab Emirates state-backed investment firm MGX. Those three will control 45% of the new U.S. TikTok entity.
Oracle, Silver Lake and MGX did not return requests for comment.
About a third of the newly-formed TikTok operation will be held by existing investors of ByteDance, the Chinese parent company of the video app. And around 20% will be kept by ByteDance.
A seven-member board of directors, most being American, will oversee the new entity, according to the memo, which was first reported by Axios.
The deal caps more than five years of mounting pressure from Washington, where bipartisan concerns about TikTok's ties to China prompted Congress to pass a law in 2024 that would have banned the app unless it was sold.
The law was upheld by the Supreme Court in January. For months, TikTok was technically operating in violation of federal law, but Trump issued a flurry of executive actions to delay enforcement of the law that would have banned the popular video app.
Jim Secreto, former Treasury official who worked on TikTok policy during the Biden administration, said the deal signed on Thuesday does not completely sever ties with ByteDance, something the law Congress passed was intended to set into motion.
"The law requires a clean break from ByteDance. This structure doesn't meet that standard," Secreto said. "It looks more like a franchise deal that leaves TikTok's core technology in China than a true divestment. By sidestepping the guardrails Congress set, the national security concerns around covert data access and manipulation of the algorithm remain unresolved."
The White House declined to comment.
TikTok has an estimated 2 billion users globally, and less than 10% of its worldwide users are based in the U.S.
A new U.S. entity overseeing the American version creates a curious situation for the viral video app: One version of the service will be under the direction of an American-backed company, with additional checks and balances on content flows and data security while a second version of the app, wholly operated by ByteDance, will be available to the rest of the world.
The deal delivers a major win for Larry Ellison, expanding his family's grip on more corners of American media and entertainment.
Ellison is a major backer of Paramount Skydance, a deal that was completed this year.
His son, David Ellison, who is the chairman and CEO of Paramount Skydance, has made a hostile bid to take over Warner Bros. Discovery, just as streaming giant Netflix has made its own bid, which top officials at Warner have endorsed.
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