TikTok said on Thursday that a deal to spin off its U.S. business to non-Chinese investors has been finalized, marking a new chapter for the popular short-video app that has been a pawn for years in high-stakes U.S.-China negotiations.
The divestiture from TikTok’s Beijing-based former parent company, ByteDance, means that the wildly popular app will continue to operate in the United States and will be owned by a consortium including tech company Oracle and private equity firm Silver Lake, after a Biden-era law banned the platform if it remained under Chinese ownership control. President Donald Trump had ordered a short-term suspension of the ban last year to give TikTok time to work out a sale.
TikTok said in a statement that TikTok USDS Joint Venture LLC has been established and is majority American owned, with Silver Lake, Oracle and MGX each holding a 15 percent stake.
The divestiture marks a victory for U.S. security hawks, who had pushed for years to force a sale of TikTok, out of fear that Beijing could use it for propaganda purposes. Such a deal originally seemed like a long shot, with TikTok more inclined to shut down its U.S. operations in response to Congress’ sell-or-ban legislation, rather than sell under duress. China’s government has harshly criticized U.S. pressure on TikTok, the most internationally successful Chinese social media platform, to sell as “robbers’ logic.”
But amid trade talk with the U.S. last year, Beijing began to view a TikTok sale as a concession that it could accept, as it pursued other asks from the Trump administration in areas like lower trade tariffs and technological export controls.
Friday marks an 120-day deadline for a divestiture to take place, under an executive order that Trump signed in September. The executive order had ordered the attorney general to take no actions to enforce the TikTok ban legislation for the four months, as the company worked to get the divestiture finalized and through regulatory review in both countries.
Trump’s executive order had said the divestiture plan would put the U.S. TikTok app under a new joint-venture in which ByteDance holds a less than 20 percent stake. U.S. “trusted security partners” would retrain the algorithms and monitor any software updates to ensure that Beijing is not exerting influence.
TikTok has some 170 million U.S. users, and is particularly popular with younger demographics. The platform is increasingly influential in politics, with Trump starting an account in summer 2024 to reach younger voters in his presidential campaign.
While Trump had supported banning TikTok during his first presidency, he switched to a stance of wanting to “save” the app by changing its ownership during President Joe Biden’s term.
Trump and China’s government each gave their public blessing for the sale in September, following a phone call between the two nations’ leaders, which gave TikTok a green light to move forward. The Chinese government said at the time that it welcomed businesses to “conduct commercial negotiations based on market rules.”
The Washington Post previously reported that Vice President JD Vance had been involved in the negotiations, suggesting in September that the U.S. demand a deal to be reached on the same day or that it would shut down TikTok in the country.
TikTok had raised concerns in U.S. national-security circles as a rare Chinese social media company that is popular in the West, with the potential to influence what entertainment content reaches young Americans and to affect their worldview.
There has not been evidence of the Chinese Communist Party co-opting TikTok’s operations to push propaganda to Americans, and Beijing has traditionally been more keenly interested in its domestic censorship operations. However, critics say that under Chinese law, ByteDance, like other Chinese companies, would have little power to resist government interference, if it were to occur.
Drew Harwell contributed to this report.
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