American investors will close a deal for 50% ownership of TikTok on January 22
TikTok in the United States is about to see a major change as a new US-based algorithm is introduced in the name of “protecting Americans’ data and US national security.”
After more than five years of negotiations to ban TikTok over national security concerns, the sale is set to be finalized. If approved by the Chinese government, TikTok will be 50% owned by investment firms in the United States on January 22 and will comply with the requirements of the Protecting Americans from Foreign Opponents of Controlled Apps Act, signed by President Biden.
According to a report from Associated PressTikTok has signed deals with Oracle, Silver Lake and Abu Dhabi state-owned MGX. These entities will own a 15% stake, with other unnamed investors bringing it to a 50% US investment, with 19.9% held by ByteDance and 30.1% held by affiliates of existing ByteDance investors.
This is enough to keep TikTok from being banned in the United States, but it does mean some behind-the-scenes changes that may affect users. Trump’s friend Larry Ellison co-founded Oracle and Silver Lake is an investment firm that previously invested in Twitter.
Under the new agreement, the seven-member board will be mostly American. It will be subject to terms that “protect Americans’ data and US national security.”
Oracle will store user data from the US, and an internal TikTok memo that revealed the information said users would continue to “enjoy the same experience as today.” Advertisers will not be affected by the change.
How US users will interact with the platform is changing because the algorithm is changing. TikTok’s algorithm will be retrained on user data in the US, excluding data from all other locations to “ensure that the source of the content is not tampered with from outside.”
The new US joint venture will be responsible for content moderation and policies within the country. It’s unclear how this will affect content that users can see and post in the United States.
TikTok ban timeline
The saga of TikTok’s ban in the United States dates back to June 2020, when influencers on the popular platform convinced their followers to reserve thousands of seats for Trump rallies, leaving the seats empty. While there’s no way to know if this was the actual catalyst for the original ban, it was quickly followed by President Trump’s swift action to ban the app along with WeChat, citing “national security.”
TikTok has been facing the threat of a ban since 2020
The ban was challenged and passed, blocked by a judicial government, and then a device-specific ban came into force in December. At that point, Trump lost the election and focused on overturning the results, and the ban entered the limbo of a legal battle.
The ban was challenged again and again, until finally in June 2021, President Biden revoked President Trump’s executive order. However, in the same order lifting the ban, Biden asked the federal government to evaluate the threats posed by China-based apps.
Again, nothing was said about the TikTok ban for most of Biden’s tenure, but then the results of the investigation came out. The federal government has argued that there is a danger that Americans could be exposed to apps and algorithms controlled by foreign entities.
This led to the introduction and eventual signing of the Act to Protect Americans from Foreign Adversaries of Controlled Apps during the Biden administration. It would have apparently been a win for the former president, as he wanted the ban in the first place and was very hostile to China and its leaders, but things moved quickly.
There was a lot of backlash because TikTok was massively popular in the United States, and it seemed highly unlikely that ByteDance would ever sell the American part of the company. After meeting with Republican Party donor Jeff Yass in March 2024, Trump was convinced that the government banning TikTok was the wrong move and would give the government legal preemption to pick and choose between competing apps.
Yass reportedly held a major financial stake in TikTok. At the time, he also took advantage of Trump’s hatred of Facebook and suggested that banning TikTok would benefit Facebook.
“I don’t want Facebook… to get better. They are the real enemy of the people!” Trump was writing on Truth Social at the time.
TikTok US will be under the control of American investment firms
So with this new stance on saving TikTok, Trump ran on the promise that TikTok would be saved. On the day he was inaugurated, he signed an executive order that was not legally enforceable to delay the ban on TikTok.
It took some time for Apple and Google to restore the app to their respective app stores. Even at the insistence of the president, the law was clear and companies could face heavy fines.
A letter from the attorney general promised that companies would not be penalized for breaking the law. President Trump repeatedly delayed the ban, citing national security concerns, until a decision was finally reached.
It seems likely that the Chinese government will approve the TikTok deal and ownership will change hands on January 22. It’s unclear how long before US users notice a difference in the popular platform’s algorithm or policy.
Many hope it will be business as usual. But there are some concerns that the association of investment firms with the president and his administration’s priorities could influence the new algorithm.