How TikTok’s $14 Billion U.S. Deal Will Work Under Oracle Partnership

TLDR

• ByteDance signed agreements to transfer control of TikTok’s U.S. operations to a new joint venture with Oracle, Silver Lake, and MGX as lead investors
• The new entity will be 80.1% owned by American and global investors, with ByteDance keeping 19.9%
• Oracle will store U.S. user data in its cloud centers and audit security compliance as the trusted technology partner
• The $14 billion deal is scheduled to close on January 22, 2025, meeting national security law requirements
• Separate ByteDance entities will continue handling advertising, e-commerce, and marketing functions

ByteDance signed binding agreements on Thursday to create a new joint venture for TikTok’s U.S. operations. TikTok CEO Shou Zi Chew announced the deal in a memo to employees.

The new company is called TikTok USDS Joint Venture LLC. Oracle, Silver Lake, and Abu Dhabi-based MGX are the managing investors in the venture.

American and global investors will control 80.1% of the new entity. ByteDance will keep a 19.9% ownership stake.

Vice President JD Vance said in September the deal values TikTok’s U.S. business at $14 billion. The final valuation was not disclosed on Thursday.

A consortium including Oracle, Silver Lake, and MGX will own 50% of the joint venture. Each of these three companies will hold a 15% stake. Affiliates of existing ByteDance investors will hold just over 30%, and ByteDance will maintain almost 20%.

The transaction is set to close on January 22, 2025. This timeline meets the deadline established by U.S. national security legislation.

Security and Data Management

Oracle will function as the trusted security partner under the agreement. The company will audit and validate that the joint venture complies with national security terms.

All sensitive U.S. user data will be stored in Oracle’s cloud computing facilities based in the United States. The joint venture will retrain TikTok’s recommendation algorithm using only U.S. user data.

The new entity will manage data protection, algorithm security, content moderation, and software assurance. A seven-member board with an American majority will govern the joint venture.

ByteDance will appoint one of the seven board members. The company’s TikTok entities will handle different business operations separately.

Separate Business Operations

ByteDance-controlled TikTok entities will manage global product interoperability. These operations will also oversee e-commerce, advertising, and marketing activities.

The ByteDance entity will generate revenue from these business functions. The joint venture will receive a portion of this revenue for providing technology and data services.

Two sources familiar with the matter confirmed this revenue-sharing arrangement on Friday. The sources requested anonymity due to the sensitive nature of the deal.

Legal Context

The Supreme Court upheld a national security law in January 2024 requiring ByteDance to divest TikTok’s U.S. operations. Without divestiture, the company would face an effective ban in the country.

President Donald Trump signed an executive order in September 2024 approving the proposed deal. The order gave the company 120 days to complete the transaction.

Trump initially attempted to ban TikTok in August 2020 citing national security concerns. The app currently has more than 170 million regular users in the United States.

Trump has over 15 million followers on his personal TikTok account. He said the platform helped him win reelection last year.

Oracle shares increased nearly 6% in premarket trading on Friday after the announcement. The company will earn revenue from providing technology services to the joint venture.

Democratic Senator Elizabeth Warren raised questions about the deal. She said Americans deserve transparency about whether Trump made a backdoor agreement for the transaction.

Representative John Moolenaar, who chairs the House Select Committee on China, said he plans to host TikTok leadership at a hearing in 2026. Questions remain about the ongoing business relationships between ByteDance and the joint venture.

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