In mid-December 2025, TikTok’s Chinese parent company ByteDance officially signed a high-stakes deal to spin off its U.S. operations, a move designed to prevent a nationwide ban in the United States. While the agreement introduces new American stakeholders and governance safeguards, the underlying structure reveals why ByteDance continues to wield significant influence over TikTok’s core business. The deal is expected to close on January 22, 2026.
The New TikTok U.S. Ownership Structure
Under the agreement, TikTok’s American business will operate as a new entity called TikTok USDS Joint Venture LLC. A U.S.-led investor consortium headed by Oracle, Silver Lake, and Abu Dhabi–based MGX will hold a majority ownership stake, estimated between 50% and 80%, depending on asset valuation methods.
ByteDance will retain a 19.9% direct stake, the maximum allowed under the U.S. foreign ownership rules governing the deal. Governance will be handled by a seven-member board, with a majority of U.S. citizens, meeting national security requirements set by Washington.
Why ByteDance Still Retains Control
Despite appearances, several key provisions ensure ByteDance remains deeply embedded in TikTok’s success:
Revenue and Business Operations
According to an internal memo from TikTok CEO Shou Zi Chew, ByteDance will continue managing the platform’s most profitable segments, including advertising, TikTok Shop e-commerce, and marketing strategy. U.S. investors are largely tasked with compliance and oversight, not daily operations.
Algorithm Ownership
TikTok’s powerful recommendation algorithm remains Chinese intellectual property. Because China classifies it as a restricted technology export, the algorithm is licensed, not sold, to the U.S. entity. Oracle will oversee and retrain it using U.S. user data, but the core source code remains under ByteDance’s control.
Ongoing Economic Ties
Through licensing and service agreements, ByteDance is expected to retain up to 50% of the profits generated by TikTok’s U.S. operations. This structure allows the American market to remain a major revenue stream for the Beijing-based company.
What Changes for TikTok Users?
For TikTok’s 170 million U.S. users, the transition will be nearly invisible. The same app, accounts, and features will remain intact. All U.S. user data will be stored exclusively on Oracle’s U.S.-based cloud infrastructure, previously known as Project Texas.
Over time, the “For You” feed may subtly change, as the algorithm will be retrained solely on U.S. behavior, potentially reducing global trend influence.
Critics argue the deal resembles a franchise model rather than a full divestiture, as ByteDance retains the algorithmic “brains” and advertising “engine.” While the deal satisfies legal requirements on paper, it leaves open questions about true independence and long-term national security implications.
