TikTok has announced a two-company structure intended to resolve a five-year standoff with U.S. regulators: a newly formed TikTok U.S. joint venture and a separate TikTok U.S. company. The joint venture will be governed by three management investors—Silver Lake, Oracle and UAE fund MGX—each holding 15 percent, while ByteDance retains a 19.9 percent stake and remains the largest single shareholder. Crucially, ByteDance will keep ownership of the platform’s algorithmic intellectual property and license its use to the joint venture, collecting fees in return.
Under the plan the joint venture will assume responsibility for information-security functions that worry American officials: protection of U.S. user data, algorithmic safety and content moderation processes. The more lucrative pieces of the business—advertising, e-commerce, marketing and global product connectivity—will remain with TikTok U.S. company, which is 100 percent owned by ByteDance. In practice, that split preserves both a U.S.-facing governance layer and ByteDance’s economic and technological control over the product.
This arrangement is the latest chapter in a tug of war that began in earnest in 2019, when U.S. authorities first targeted TikTok over data-handling concerns. The pressure intensified under the Trump administration’s 2020 executive orders and again under a 2024 Biden-era law that gave ByteDance 270 days to divest U.S. operations or face a ban. Subsequent regulatory manoeuvring and a return to a Republican White House prolonged the uncertainty, catalysing negotiations over ownership, governance and technical controls.
The possibility of a U.S. ban briefly prompted millions of American users to migrate to competing apps such as Xiaohongshu (RED), producing a conspicuous spike in downloads and a short-term boost to brands seeking to reach young audiences. Those “TikTok refugees” demonstrated both the fragility of user attention and the commercial value of continuity: for marketers, preserving reach in the United States was worth accommodating new platform dynamics.
The structure resembles earlier compromises such as Apple’s 2018 iCloud arrangement with a Chinese state-backed operator—localizing data operations while retaining the vendor’s technology. Yet the TikTok deal differs in a crucial respect: ByteDance is not divesting its algorithmic know‑how. By licensing the algorithm rather than transferring ownership, ByteDance keeps the strategic asset that underpins content recommendation and monetisation, while offering partners and regulators a degree of operational oversight.
That compromise advances several objectives at once. ByteDance preserves the engine that makes its product distinctive and continues to control the lion’s share of revenue streams, while the United States secures an institutional interlocutor to address security and moderation concerns. But the arrangement is not an ironclad solution: licensing terms, enforcement mechanisms and the practical independence of the joint venture’s managers will be scrutinised by lawmakers and regulators who remain sceptical about foreign influence in critical digital infrastructure.
The deal sets a potential template for other cross-border tech disputes: partial governance transfer plus intellectual‑property licensing can provide market access without full divestment. It also highlights the broader strategic dilemma for governments trying to reconcile national-security concerns with the economic and social costs of decoupling popular consumer platforms. Expect further legal and political contestation as stakeholders test whether the safeguards are meaningful in practice and whether Congress or regulators will demand stronger remedies.