TikTok’s Journey to the West
Creators, sellers, and doom-scrollers can rest easy knowing that TikTok has found a new home on U.S. soil. (David Shepardson, Reuters). Following an executive order and subsequent landmark Supreme Court ruling, TikTok’s parent company, ByteDance, had no choice but to divest TikTok so that the app’s data could be stored and controlled by U.S. entities. Id. Several prominent investors, including Oracle, Silver Lake, and MGX, have emerged as potential stakeholders seeking to acquire an ownership interest in the company. Id. This post discusses the acquisition of and changes to the app and further examines whether this divestiture will address the Trump administration’s security concerns.
ByteDance is a technology company founded by Zhang Yiming in Beijing, China, that experienced early success with products such as DouYin, a short-video sharing social media platform. (Forbes; ByteDance). DouYin’s success led ByteDance to develop TikTok, a counterpart of DouYin, that could take on the global market. Id. In no time, TikTok garnered significant global success, surpassing over one billion users worldwide, and offering a wide range of content and e-commerce features. (Forbes). The app’s success is driven in part by its algorithmic design, which analyzes user behavior to tailor content based on the user’s preferences. TikTok Inc. v. Garland, No. 24–656, slip op. at 14-15 (U.S. Jan. 17, 2025).
Various critics, from professors to presidents, have scrutinized TikTok’s data practices, but TikTok’s legal struggles escalated when Congress passed the Protecting Americans’ Data from Foreign Adversary Controlled Applications Act of 2024 (“Act”). (David Streitfeld & Theodore Schleifer, New York Times; Congress). The Act makes it unlawful for a company in which a foreign adversary (i.e., China) holds more than a 20 percent stake to distribute applications in the U.S. (Congress). A company would be exempt, however, if it completed a qualified divestiture before the Act took effect. Id. In response, TikTok filed suit against then-Attorney General Merrick Garland in April 2024, TikTok Inc. v. Garland, No. 24–656, slip op. at 7-9 (U.S. Jan. 17, 2025). The plaintiffs argued that requiring ByteDance to complete a qualified divestiture of TikTok constituted compelled speech in violation of the First Amendment. Id. The case ultimately reached the Supreme Court, which upheld the Act. Id. On January 17, 2025, the court held that the Act survived constitutional scrutiny because it was narrowly tailored to protect national security by preventing foreign adversaries from consolidating U.S. user data. Id. TikTok Inc. v. Garland, No. 24–656, slip op. at 7-9 (U.S. Jan. 17, 2025).
The following year, on January 20, 2025, President Trump exercised his authority given under the Act by signing the Application of Protecting Americans from Foreign Adversary Controlled Applications Act to TikTok (“Order”). (Donald Trump, White House). In the Order, President Trump claimed that the Act would interfere with his constitutional duty to steward U.S. national security and directed the Attorney General to delay enforcement of the ban for seventy-five days, allowing time to pursue a measured solution during the early days of his return to office. Id.
Following the Supreme Court’s decision, Trump reached an agreement with China, allowing TikTok to continue operating subject to new conditions (“Agreement”). (Suranjana Tewari & Lily Jamali, BBC). As detailed in the Agreement, after completing the qualified divestiture, ByteDance transferred TikTok’s operations to TikTok USDS Joint Venture LLC (“Joint Venture”), which now manages the app’s algorithm and data collection. Id. The Joint Venture is overseen by a board of directors that is predominantly American. Id. Under the ownership structure, Oracle, Silver Lake, and MGX will each hold fifteen percent stakes, ByteDance will retain a 19.9 percent interest, and the remaining 35.1 percent will be distributed among other companies. Id. Among these companies is the family office of Michael Dell and venture capital firm Vastmere Strategic Investments. Id.
While these shareholders are mostly American, MGX’s involvement complicates the mission to keep American user data out of other countries’ hands. (Emmett Lindner, New York Times). MGX is an Emirati investment firm cofounded by G42, an Emirati artificial intelligence (“AI”) company with notable ties to Chinese companies. Id. President Trump has also worked with MGX on big projects involving cryptocurrency and AI data center construction. Id.
A key component of the Agreement concerned the disposition of TikTok’s algorithm. Id. Under the Agreement, ByteDance retains ownership of the algorithm but licenses it to the Joint Venture, where it may be trained using U.S. user data. Id. Safra Catz, Oracle’s executive vice chair, served as the company’s lead negotiator in the Agreement. (David Streitfeld & Theodore Schleifer, New York Times). Oracle is well-positioned to host TikTok’s algorithm due to the extensive data storage and computing capacity required to serve over 200 million U.S. users. (David McCabe & Emmett Lindner, New York Times). Although permitting U.S.-based Oracle to host TikTok’s data may alleviate some privacy concerns, it remains unclear whether the new structure represents a meaningful departure from the previous framework. Id. Despite the restructuring, ByteDance continues to control the app’s algorithm and source code, potentially enabling it to influence the content users see. Id. TikTok users have had mixed reactions, ranging from ambivalence to anxiety over the shift. (Leila Fadel, NPR). ByteDance also retains a substantial ownership interest just below the Act’s twenty percent. (David Shepardson, Reuters).
Although Chinese influence over TikTok remains speculative, the broader political posture between the U.S. and China contextualizes these concerns. (Keith Bradsher et al., New York Times). Tensions have escalated since President Trump imposed tariffs, including a 100 percent tariff on electric vehicles manufactured in China. Id. These tariffs have disrupted Chinese exports and arguably increased the economic significance of technology platforms such as TikTok to the Chinese economy. Id. These tariffs may ease, however, after the Supreme Court held that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, effectively invalidating Trump’s use of emergency tariff authority. Learning Resources, Inc. v. Trump, No. 24–1287, slip op. at 20 (U.S. Feb. 20, 2026).
President Trump has maintained a rocky relationship with TikTok, oscillating between threats to ban the app and claims of having saved it. (David McCabe & Emmett Lindner, New York Times). Although users concerned with national security may take some comfort in the fact that data collected by TikTok’s algorithm will be stored in the U.S., whether this Joint Venture meaningfully enhances data privacy will depend on how the Joint Venture ultimately manages and uses that data. Id. Further, ByteDance’s continued involvement in TikTok leaves unresolved questions regarding the extent of its ongoing influence over content and decision-making. Id. Ultimately, whether this divestiture and acquisition meaningfully resolves national security and data privacy concerns depends less on formal ownership agreements and more on the objectives of TikTok’s new orders.