China-based technology company ByteDance has agreed to sell and restructure TikTok’s U.S. operations, marking a major turning point in the years-long standoff between the popular social media platform and the United States government over national security concerns.
The deal, announced 18 December, will see TikTok’s U.S. business transferred into a newly created entity controlled by American investors, allowing the app to continue operating in the U.S. market while reducing ByteDance’s ownership and influence. The transaction is expected to be finalised in early 2026, subject to regulatory approvals.
The sale is not driven by commercial strategy but by legal and political pressure. In 2024, the U.S. Congress passed legislation requiring ByteDance to divest TikTok’s U.S. operations or face a nationwide ban. Lawmakers argued that TikTok’s Chinese ownership posed a potential national security risk, citing concerns that U.S. user data could be accessed by the Chinese government or that the platform’s algorithm could be used to influence public opinion.
TikTok and ByteDance have repeatedly denied these claims, insisting that user data is protected and that the Chinese government has no control over the company’s operations. However, mounting bipartisan pressure in Washington left the company with limited options: sell the U.S. business or exit the market entirely.
The United States is TikTok’s most valuable market, with more than 170 million users and a thriving advertising and creator economy. A forced shutdown would have been a major blow to the company and millions of American creators who rely on the platform for income and visibility.
Under the agreement, TikTok’s U.S. operations will be placed under a new joint venture, commonly referred to as TikTok U.S. Data Security (USDS). The new entity will be majority-owned and controlled by American investors, with ByteDance retaining a minority, non-controlling stake capped at under 20 per cent.
A consortium led by U.S. technology and investment firms — including Oracle and private equity group Silver Lake — is expected to take a significant ownership share. Existing non-Chinese investors in ByteDance will also hold stakes in the new company.
Crucially, governance of the new entity will shift to a board dominated by U.S. citizens, ensuring that strategic decisions, data handling, and security protocols are no longer under Chinese control.
The TikTok U.S. business has been valued at approximately $14 billion, according to reports familiar with the deal. While this figure is substantial, it is lower than previous estimates of TikTok’s global value, which had at times exceeded $100 billion.
The reduced valuation reflects the forced nature of the sale, regulatory uncertainty, and restrictions around the platform’s core technology — particularly its powerful recommendation algorithm. ByteDance is not expected to transfer full ownership of the algorithm, instead allowing the U.S. entity to operate a version trained and managed under strict oversight.
One of the central pillars of the deal is data security. All U.S. user data will be stored on servers located within the United States, with Oracle designated as the trusted technology partner responsible for data hosting, auditing, and compliance.
The new U.S. entity will also oversee content moderation and algorithmic operations within the country. This is aimed at preventing any foreign interference in how content is promoted or suppressed on the platform.
These measures build on earlier initiatives such as “Project Texas,” TikTok’s previous attempt to reassure U.S. regulators by ring-fencing American user data.
The deal is expected to be completed in early 2026, pending approvals from U.S. regulators and other relevant authorities.
Any delays or legal challenges could complicate the timeline, particularly if political leadership or regulatory priorities shift. TikTok has already mounted legal challenges against the divest-or-ban law, arguing that it violates constitutional protections, though courts have so far allowed the law to stand.
TikTok will continue to operate normally in the U.S., with no changes required to existing accounts or content.
