TikTok will avoid a U.S. ban after Chinese owner ByteDance agreed to a joint venture

TikTok may have avoided the guillotine for now.

The platform, boasting 2 billion users worldwide, will remain online in the United States after its Chinese parent, ByteDance, agreed to hand control of the app’s U.S. business to an American-led group of investors, Axios reported on Thursday night.

The deal is designed to defuse Washington’s long-running national security concerns while stopping short of a full break-up.

Under the proposed structure, ByteDance would reduce its ownership to just under 20%, the maximum foreign stake permitted under U.S. law, while a newly formed entity, TikTok USDS Joint Venture LLC, backed by a majority-American seven-member board.

According to an employee memo sent from TikTok's CEO Shou Zi Chew on Thursday, the consortium is targeting a closing date of January 22nd next year. The letter notes that the new joint venture will oversee its own algorithm, “retraining the content recommendation algorithm on U.S. user data to ensure the content feed is free from outside manipulation,” in addition to data security, content moderation, and deployment of the U.S. version of the app and platform.

Hyperscaler Oracle $ORCL, which has long positioned itself as TikTok’s “trusted technology partner”, is expected to play a central role in hosting U.S. user data and overseeing security reviews. The group also includes private equity firm Silver Lake and Abu Dhabi-based investment company MGX.

TikTok USDS Joint Venture is estimated to be valued at around $14 billion, according to Vice President JD Vance's comments in September, but the final figure was not made public on Thursday.

Following the announcement, shares in some investors rose. Most notably, Oracle's shares gained nearly 5% in after-hours trading, giving the cloud provider a much-needed boost, having shed 20% over the last month.

For U.S. investors, the venture is attractive, as TikTok touts having more than 170 million American users, while it allows ByteDance to preserve some economic exposure to one of its most valuable markets.

The agreement is the most concrete step yet to comply with legislation passed by Congress in 2024 that ordered ByteDance to divest TikTok’s U.S. assets or face a nationwide ban. The law was driven by fears that TikTok’s data or recommendation algorithms could be accessed or influenced by the Chinese government, and was one of the rare points of bipartisan consensus in Washington.

Crucially, the plan attempts to address the thorniest issue in the TikTok debate, the "For You" algorithm, as U.S. user data, and recommendation systems serving American users, will be stored and operated domestically, as part of the deal.

Yet, as the agreement is a partial separation, with ByteDance retaining a minority stake and ongoing commercial ties, it's likely to attract some criticism from Washington's staunchest China hawks.

TikTok's fiercest critics argue that anything short of a clean break leaves open the possibility of Beijing's influence — whether through corporate governance, technical dependencies, or intellectual property. Refuting this, supporters of a partial separation argue that places TikTok under tighter oversight than most social media platforms operating in the U.S., many of which collect vast amounts of user data with far less scrutiny.