TikTok US Will Be Controlled By Oracle, Silver Lake And Andreessen

After months of intense debate, the fate of TikTok’s US business appears to have been decided: according to the JPM, one of the world’s most valuable media properties will be controlled by an investor consortium including Oracle, Silver Lake and Andreessen Horowitz under a framework the U.S. and China are finalizing as talks shift into high gear.

The arrangement which was discussed by U.S. and Chinese negotiators in Madrid this week, would create a new U.S. entity to operate the app, with US. investors holding a roughly 80% stake and Chinese shareholders owning the rest. This new company would also have an American-dominated board with one member designated by the U.S. government.

Existing users in the US would be asked to shift to a new app, which TikTok has built and is testing. More importantly, TikTok engineers will re-create a set of content-recommendation algorithms for the app, using technology licensed from TikTok’s parent ByteDance, although even the smallest deviation from the parent algo would likely doom the US-based app to failure as that particular highly addictive “secret sauce” is why the app is so popular.

Oracle, a longtime TikTok partner, would handle user data at its facilities in Texas, the WSJ noted. 

Both sides are still working out the final details of the proposed deal and terms could change. Negotiations over TikTok come as both Washington and Beijing lay the groundwork for a potential meeting between President Trump and Chinese leader Xi Jinping later this year, with Beijing pushing for a Trump visit to China.

For the TikTok plan to comply with U.S. law, tech industry executives argue, its algorithms must be created and maintained by an American engineering team insulated from Chinese influence. Beyond the financial terms, deciding how to handle TikTok’s algorithm has been a tricky part of the deal because it is seen as arguably the most lucrative part of the company.

“We’ve got a deal on TikTok. I’ve reached a deal with China. I’m going to speak to President Xi [Jinping] on Friday to confirm everything,” Trump said outside the White House Tuesday morning before leaving for a trip to the U.K. “These are very big companies that want to buy it.”

The framework of the agreement came together during the Madrid trade talks in recent days. The contours of the deal have been under consideration since this spring. The two sides began discussions in January, when Trump said he would keep TikTok from going dark under a 2024 law by executing a deal to save it in the U.S.

“Both sides have reached a basic consensus on resolving the TikTok issue, ” Wang Jingtao, deputy director of China’s top cyberspace regulator, told reporters in Madrid.

Existing ByteDance investors, including Susquehanna International, KKR and General Atlantic, would be part of the group owning roughly 80% of the new company. The stake of ByteDance’s Chinese shareholders would dip just under 20% to comply with a U.S. law passed last year requiring the firm to do a deal or stop operating in America.

Beijing had expressed concern about a U.S.-controlled entity using technology that TikTok’s parent developed in China, in particular the algorithm that decides which videos to recommend. But Wang said China was now open to “licensing the use of TikTok’s algorithm and other intellectual property rights.” He also said both sides have agreed on “entrusting the operations of U.S. user data and content security business.”

The details will receive scrutiny from officials in both countries who are still worried about the national-security implications. Concerns about Chinese control of an app used by some 170 million Americans led Congress to pass the law that President Joe Biden signed last year.