TikTok, owned by the Chinese company ByteDance, has been at the center of controversy in the United States for four years. The primary concern is that user data could potentially be accessed by the Chinese government. This situation has often left American users caught in the middle of the geopolitical tension. Earlier this year, the app experienced a temporary outage in the U.S. that left millions of users in suspense before service was quickly restored. TikTok returned to the App Store and Google Play Store in February.
A number of investors are competing for the opportunity to purchase the app. If a deal is finalized, the platform’s U.S. business could see its valuation soar to over sixty billion dollars, according to an estimate from Angelo Zino, a senior vice president at CFRA Research. Following extensive discussions and after the TikTok ban deadline was extended for a fourth time, progress appears to have been made. Last week, an announcement indicated that the Chinese leadership had given approval for a TikTok deal. This arrangement would allow a consortium of U.S. investors to control the platform. ByteDance stated publicly that it would ensure the platform remains available to American users.
A framework deal was reportedly established between the U.S. and China. New information indicates that a consortium of investors, including Oracle, Silver Lake, and Andreessen Horowitz, may oversee TikTok’s U.S. operations. These investors are expected to hold an eighty percent stake, with the remaining shares belonging to Chinese stakeholders. The new entity’s board would predominantly consist of U.S. members, with one member appointed by the U.S. government.
Over the weekend, it was mentioned in an interview that Rupert Murdoch and his son Lachlan are probably going to play a role, along with Oracle’s executive chairman Larry Ellison and Dell Technologies CEO Michael Dell. Oracle is likely to handle the app’s security and safety measures. The company already provides cloud services for TikTok and manages user data in the U.S. Notably, Oracle previously made a bid for TikTok back in 2020.
As part of the proposed arrangement, Oracle would replicate and secure a new U.S. version of the algorithm. The U.S.-based TikTok owners could lease the algorithm from ByteDance, which Oracle would then retrain. ByteDance would not have access to information about TikTok’s U.S. users or any influence over the U.S. algorithm.
Reports indicate that when the deal is finalized, the current TikTok app will be discontinued in the U.S. Users will need to transition to a new platform. However, the specifics of this new platform remain largely unclear, including its features and how it will differ from the original app.
To understand this situation, it is helpful to revisit the timeline of TikTok’s relationship with the U.S. government. The drama began in August 2020 when an executive order was signed to ban transactions with parent company ByteDance. A month later, the administration sought to force a sale of TikTok’s U.S. operations to a U.S.-based company, with leading contenders including Microsoft, Oracle, and Walmart. However, a U.S. judge temporarily blocked the executive order, allowing TikTok to continue operating.
Things progressed further last year following the transition to a new administration. After the Senate passed a bill against TikTok, the President signed it into law. In response, TikTok sued the U.S. government, challenging the constitutionality of the ban and arguing that the app and its American users were having their First Amendment rights violated. The company has consistently denied that it poses a security threat.
More recently, there has been a change of heart from a key figure, who is now trying to achieve a fifty-fifty ownership arrangement between ByteDance and a U.S. company. There have been several other contenders for purchasing TikTok. One group is a consortium organized by Project Liberty founder Frank McCourt, which has the support of investment firm Guggenheim Securities and the law firm Kirkland & Ellis. Supporters include Reddit co-founder Alexis Ohanian, investor Kevin O’Leary, inventor of the World Wide Web Tim Berners-Lee, and senior research scientist David Clark.
Another group, called the American Investor Consortium, is led by a founder and includes Roblox co-founder David Baszucki, Anchorage Digital co-founder Nathan McCauley, and famous YouTuber MrBeast. Other parties that have been reported as in the running included Amazon, AppLovin, Microsoft, Perplexity AI, Rumble, Walmart, Zoop, former Activision CEO Bobby Kotick, and former U.S. Treasury Secretary Steven Mnuchin.
The story has been updated after publication.