TikTok deal creates U.S.-based version, but questions remain about algorithm
Oracle one of TikTok's new investors
U.S. technology company Oracle and private equity firm Silver Lake will collectively control 80 percent of the new American version of TikTok.
SAN JOSE, Calif. - TikTok is not going away anytime soon.
What we know:
The Chinese-owned social media platform announced it has finalized a $14 billion deal to create a U.S.-based version of TikTok, backed primarily by non-Chinese investors, a move required under a 2024 federal law citing national security concerns.
Under the agreement, U.S. technology company Oracle and private equity firm Silver Lake will collectively control 80 percent of the new American version of TikTok. Additional investors include the investment office of Michael Dell, according to business attorney and analyst Parag Amin.
The backstory:
TikTok’s Chinese parent company, ByteDance, was legally required to restructure ownership after Congress passed a law labeling TikTok a national security risk and a potential propaganda tool of the Chinese government, citing concerns it could influence or collect data on its roughly 66 million U.S. users.
"What China was doing, according to the U.S. intelligence community, was scooping up information on American citizens," said Eric O’Neill, a cybersecurity expert and the author of the book, Spies, Lies and Cybercrime. "They can learn a lot about you based on what you do on your social media app."
Under the new structure, U.S. user data will be stored by Oracle — a change cybersecurity analysts say addresses some of the government’s data security concerns.
However, significant questions remain about TikTok’s powerful recommendation algorithm, widely credited for keeping users engaged.
"The algorithm is extremely effective at curating a continuous stream of videos that just keep people scrolling," O’Neill said.
Amin described the algorithm as TikTok’s "secret sauce."
In announcing the deal, TikTok said it will "retrain, test and update" how the algorithm recommends content under the new ownership. The company did not specify what changes users might see, raising concerns about whether certain types of content could be harder to find or restricted altogether.
"That’s a big critique a lot of these social media companies have faced — they have immense power over what is shown to users or what is suppressed," Amin said.
ByteDance maintains offices in the Bay Area and across the United States. It remains unclear what the ownership change will mean for ByteDance employees working at the company’s offices in San Jose and elsewhere.