American TikTok

TikTok’s Two Identities

​After an exhausting legal battle and a threat of a total US ban, TikTok’s Chinese owner ByteDance has officially struck a deal to create a new American TikTok.

This entity has a slew of non-Chinese investors, including: tech giant Oracle, Abu Dhabi-based investment firm MGX, and American private equity giant Silver Lake. These three will each own a 15% slice. Tech billionaire Michael Dell’s investment firm and a bunch of other private equity firms have smaller stakes.

Overall, American and other non-Chinese investors will hold 80.1% of the new entity, with ByteDance keeping 19.9%. Non-American parts of TikTok will remain with ByteDance.

A Six-Year Saga Reaches a Conclusion

Splitting TikTok into two resolves a six-year-long conflict, spanning three US presidencies. President Donald Trump originally kick-started the process to ban TikTok or force ByteDance to divest its American operations, with President Joe Biden continuing these efforts.

Ultimately, the Supreme Court upheld a federal law to ban the app if ByteDance didn’t separate the US operations by the 19 January 2025 deadline. For 14 hours, the app went dark, but then President Trump (back in office) delayed the enforcement multiple times ­— while investors ironed out the details on the new deal.

Security vs. The Secret Sauce

​A major sticking point for a deal has been TikTok’s algorithm, the code that makes the feed so addictive.

Investors want access to it, but, on the other hand, the addictiveness, combined with China-linked security concerns, was the reason for the ban in the first place.

• ​The solution: ByteDance will license the algorithm to the new US entity rather than selling it outright.
• ​The guardrail: Oracle will act as the "technological steward," hosting all US user data on its servers and retraining the algorithm on American soil to ensure no foreign manipulation.

The question remains: will a "retrained" American algorithm be as effective as the original at keeping users engaged?

Is American TikTok Different from the “Real Deal”?

​For the app’s 200 million US users, the "Save TikTok" saga finally has a legal conclusion: the app stays, but the ownership structure changes.

New app? No need to download anything. American TikTok will use the original app, although there’ll be updates.

New type of content? Possibly. For the White House, the whole point of the split was to guarantee that the Chinese government wouldn’t use the platform for propaganda purposes. Moderation will now be in different hands.

Governments Have the Final Say

​The TikTok deal is a landmark case of regulatory risks materializing in big tech. It’s unclear how much money changes hands in this split, although Vice President JD Vance floated a figure of $14 billion last year. ByteDance itself is unlisted but has a private valuation of about $500 billion.

Other aspects to consider:

• Political influence: With owners like Oracle’s Larry Ellison (a known associate of the current administration), critics worry about domestic bias replacing foreign influence.
• ​Market stability: The deal removes the "existential threat" of a ban, which would have wiped out billions in value for creators and advertisers.
• Demographic hit: TikTok and its rivals are squeezed by other governments too, with Australia recently banning social media from under-16s, and other countries considering similar bans.