Trump Approves Deal for TikTok's U.S. Operations, Valuing Company at $14 Billion
Former U.S. President Donald Trump approved a deal allowing TikTok to continue operating in the United States under new ownership, averting a potential ban. The agreement involves Oracle and other U.S. investors acquiring a significant stake in TikTok's American operations. This deal aims to address national security concerns raised by the U.S. government regarding TikTok's data handling and potential influence.
Key Details of the Agreement
The agreement, formalized through an executive order signed by President Trump, outlines the structure for TikTok's U.S. business moving forward. Under the deal, TikTok's American operations will be managed by a new board, and the algorithm, source code, and content moderation systems will be overseen by the new American owners. Oracle will be responsible for security operations and computing services.
- New Ownership Structure: U.S. investors, including Oracle, Silver Lake, and MGX Group, will collectively hold 45% of TikTok's U.S. operations.
- Data Security: Vice President Vance stated the deal ensures American users' data is more secure and will not be used for propaganda purposes.
- Algorithm Control: Oracle is expected to lead the retraining and deployment of TikTok's algorithm, ensuring it complies with U.S. regulations.
Trump's Involvement and Assurances
President Trump stated that he had a "good conversation" with Chinese President Xi Jinping, who agreed to the transaction. Trump emphasized that the new TikTok will be "wholly owned and operated by Americans." He also addressed concerns about political bias in the algorithm, assuring that "all groups, ideas, and policies will be treated fairly." This marks the fourth extension granted by Trump regarding the divestiture deadline for TikTok.
Valuation and Market Perspective
The new valuation of TikTok's U.S. business is estimated at $14 billion, a figure significantly lower than previous estimates. Vice President Vance revealed the TikTok U.S. valuation. According to market research analysts, this valuation aligns with the projected U.S. advertising revenue for TikTok in 2026.
Broader Implications and Context
The U.S. government's concerns over TikTok's operations have been ongoing for several years, with various solutions proposed, including a complete ban. The final agreement addresses concerns related to data security and content control, ensuring TikTok can continue to operate in the U.S. while adhering to American laws and regulations. The Chinese government will still need to approve aspects of the deal relating to technology exports and intellectual property.
Operating Structure
The finalized operating plan involves two main company entities: ByteDance TikTok US, fully owned by ByteDance, handling business, e-commerce, and advertising, and a new TikTok US Data Security Joint Venture. ByteDance retains ownership of the TikTok algorithm, licensing its use to the joint venture. This structure ensures both operational continuity and U.S. data security.
| Company Entity | Responsibility | Ownership |
|---|---|---|
| ByteDance TikTok US (BD TikTok US) | Commercial Operations, Branding | ByteDance (100%) |
| TikTok US Data Security Joint Venture | Data Security, Content Security | ByteDance (Majority Stake), External Investors |
