TikTok Strikes Deal to Spin Off US Entity Amid Trump’s Backing

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TikTok has finalised its agreement to create a separate US entity with primarily American investors, as announced by CEO Shou Chew in a memo to employees. This development aligns with efforts to secure TikTok's future in the US following a law mandating a spin-off from its parent company, ByteDance. The move, backed by US president Donald Trump, aims to place the popular app under American ownership, averting a potential ban.

The announcement follows a series of delays in enforcing the spin-off law while Trump negotiated for American control of TikTok. The agreed structure will see TikTok US managed by a new joint venture, with 50% ownership by Oracle, Silver Lake, and MGX, 30% by ByteDance investors; and ByteDance retaining 19.9%. Chew's memorandum indicates that, although the transaction is not yet completed, efforts are underway to finalise it by January 22, 2026.

While TikTok refrained from commenting, internal details suggest the new entity will handle US data and content moderation, with Oracle managing data storage. However, ByteDance will maintain control over global e-commerce, advertising, and marketing. Trump confirmed a deal with China to transfer TikTok's US operations to chiefly American investors, delaying enforcement of the relevant laws to permit transaction closure.

The Chinese government and regulatory bodies in both countries must provide their approval before concluding the deal. Despite Trump's optimism regarding Chinese President Xi Jinping's support, Beijing has not provided any official confirmation. The success of this transaction is pivotal, as the US law mandates ByteDance to divest 80% of its US assets to non-Chinese investors.

Key Takeaways

• TikTok signed a deal to form a new US entity with American investors.
• The transaction must close by January 22, 2026, subject to approvals.
• Oracle, Silver Lake, and MGX will own 50% of the new joint venture.

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