TikTok finalizes deal to form new U.S. entity to avoid ban
MGN
Washington — A year after a federal law that effectively mandated a nationwide ban on TikTok went into effect, the platform announced the formation of a new U.S.-based entity to comply with the statute.
TikTok confirmed Thursday that a joint venture made up mostly of U.S.-based investors had officially been formed to take over the app’s operations for American users.
A group of three firms — U.S.-based Oracle and Silver Lake and Abu Dhabi-based MGX — will serve as the venture’s managing investors and own a combined 45% of the company, TikTok said in a statement late Thursday. (Oracle was cofounded by Larry Ellison, whose son David Ellison is the chairman and CEO of Paramount Skydance, which is the parent company of CBS News. The Ellison family owns a controlling interest in Paramount Skydance.)
Another 35% will be owned by eight other investors, including Dell CEO Michael Dell’s personal investment office and the quantitative trading firm Susquehanna International Group. ByteDance will continue to own 19.9% of the company, just below the 20% cap allowed under the law.
“The majority American owned Joint Venture will operate under defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation, and software assurances for U.S. users,” the company said in a statement.
China and the U.S. both signed off on the deal to sell the app’s American operations, according to a White House official.
The bipartisan law, passed in 2024, required that TikTok’s China-based parent company, ByteDance, sever ties with the social media platform’s American operations or lose access to U.S. app stores and web-hosting services.
The law, which was unanimously upheld by the Supreme Court, made it unlawful for app stores to offer updates or new downloads after Jan. 19, 2025. But President Trump has issued executive orders every few months directing the Justice Department not to penalize the tech companies who host TikTok on their platforms, keeping the app widely available in the U.S. despite the ban.
It’s unclear how the Chinese government plans to move forward. Its statements about a forced sale have been vague, though it has said that any agreement would have to comply with Chinese laws and regulations. CBS News has reached out to the Chinese Embassy for comment.
Under the new structure, the app’s U.S. operators will “retrain, test, and update” the content recommendation algorithm that powers TikTok using data from American users, TikTok said. Oracle will also “review and validate source code on an ongoing basis,” according to TikTok.
TikTok also said the U.S. version of the app will be interoperable with the version used by the rest of the world, confirming the White House’s previous comments that Americans will still have access to global content under the new deal.
The board of directors overseeing the new venture will include representatives from several of the investors, as well as current TikTok CEO Shou Chew. The U.S.-based venture’s CEO is Adam Presser, who has worked at TikTok since 2022, according to his LinkedIn profile.
The arrangement is likely to raise concerns about whether it reaches the threshold of separation from ByteDance that lawmakers intended when they wrote the law. The law says that there cannot be any operational relationship between the new owners and ByteDance, including any cooperation with respect to TikTok’s algorithm and data sharing.
Congress ultimately left it up to the president to decide what constitutes a “qualified divestiture.”
GOP Rep. John Moolenaar of Michigan, chairman of the House Select Committee on the Chinese Communist Party, told CBS News on Thursday that the panel will have a public hearing “in the coming months” focused on two questions about the TikTok deal.
“One is: Does it make sure that the CCP does not have influence over the algorithm? And the other is: Can we assure Americans that their data is secure? Those are the two questions that need to be answered as we go forward,” the lawmaker said.
Moolenaar added, “most of us are not knowledgeable about the internal workings of that deal.”
For years, lawmakers on both sides of the aisle and U.S. officials, including the first Trump administration, sounded the alarm about the risks they argued TikTok posed to national security. The Chinese government could use the immensely popular short-form video app to spy on Americans, collect vast amounts of their data and carry out influence operations, they said.
During the court battle over the law in 2024, the Justice Department rejected the notion that Oracle could have sufficient oversight of user data and the algorithm to alleviate the national security concerns. By that point, TikTok had proposed a plan to mitigate national security concerns — known as Project Texas — that included storing U.S. user data on Oracle’s cloud infrastructure and third-party auditing of the algorithm. But the plan was dismissed by the U.S. government and lawmakers as inadequate.
The Justice Department cited the billions of lines of source code that comprise TikTok’s algorithm, as well as the three years Oracle had estimated it would take to review the code.
“Ensuring compliance would require resources far beyond what the U.S. government and Oracle possess,” a July 2024 court filing from the Justice Department said.
Meanwhile, TikTok’s lawyers said a sale was impossible because the app “would be a fundamentally different platform” if it was forced to cut ties with ByteDance because the new owner would have to rebuild the algorithm, which would take years. TikTok said the inability to share any data with ByteDance would mean that the app’s 170 million American users would not be able to see videos shared by users from around the world and vice versa.
