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TikTok, a social media platform owned by the Chinese firm ByteDance, has been embroiled in controversy in the United States for four years, primarily due to fears regarding the potential access of user data by the Chinese government.
This situation has left American users feeling caught in a complex geopolitical struggle. Earlier this year, TikTok faced a temporary outage in the U.S., causing frustration among millions of its users before service was promptly restored. The app returned to both the App Store and Google Play Store in February.
Several investors are now vying for the chance to acquire TikTok, with potential valuations for its U.S. operations forecasted to exceed $60 billion, according to estimates from Angelo Zino, a senior vice president at CFRA Research.
Following prolonged discussions and President Trump's fourth extension of the TikTok ban deadline, positive developments seem to have emerged. Last week, President Trump announced that President Xi of China had given the green light for a TikTok deal, facilitating a consortium of U.S. investors to gain control over the platform. ByteDance pledged to maintain the app's availability for American users.
Who Will Control TikTok in the U.S.?
Recently, a “framework” deal was reportedly agreed upon between U.S. officials and their Chinese counterparts, with new revelations suggesting that a consortium led by Oracle, Silver Lake, and Andreessen Horowitz may take charge of TikTok's U.S. operations.
This consortium is anticipated to hold an 80% ownership stake, while the remaining shares will be retained by Chinese stakeholders. The board of this new entity is expected to be predominantly composed of U.S. members, with one seat designated for a U.S. government representative.
Over the weekend, Trump mentioned in a Fox News interview that Rupert Murdoch and his son Lachlan are “probably” expected to play a role in the consortium, alongside key figures like Oracle’s executive chairman Larry Ellison and Dell Technologies CEO Michael Dell.
Oracle is likely to oversee the app’s security protocols, as the company currently provides cloud services for TikTok and manages its user data in the U.S. Notably, Oracle had previously pursued a bid for TikTok back in 2020.
As part of the proposed structure, Oracle intends to recreate and secure a new U.S. version of the application’s algorithm, as reported by a White House official. The U.S.-based operation may lease the algorithm from ByteDance, which Oracle would then retrain. ByteDance would not have access to user data of TikTok’s U.S. audience nor any influence over the U.S. algorithm.
What U.S. Users Should Be Aware Of
According to Bloomberg, when the deal is finalized, the TikTok application may be discontinued in the U.S., necessitating that users transition to a new platform. However, specific details about this upcoming platform, including features and similarities to the original app, remain largely undetermined.
The Journey to This Point
To fully grasp the magnitude of this evolving situation, it’s essential to recount the timeline of TikTok’s tumultuous interactions with the U.S. government, marked by legal disputes and negotiations.
The saga began in August 2020 when former President Trump enacted an executive order aimed at prohibiting transactions involving parent company ByteDance. Shortly after, his administration sought to mandate the sale of TikTok’s American operations to a domestic firm, sparking interest from Microsoft, Oracle, and Walmart.
However, a U.S. judge intervened, temporarily blocking the executive order, allowing TikTok to continue its operations amid ongoing legal proceedings.
In the following months, significant developments occurred with the change in administration. The Biden administration took action after the Senate passed legislation targeting TikTok, resulting in President Joe Biden signing the bill into law.
In response, TikTok filed a lawsuit against the U.S. government, challenging the constitutionality of the ban and claiming violations of the First Amendment rights of both the app and its American users. The firm has consistently refuted the notion that it poses a national security risk, insisting that data stored in the U.S. complies with local regulations.
Today, in a surprising twist, Trump has shifted his stance and advocates for a 50-50 ownership deal between ByteDance and a U.S. entity.
Numerous contenders have emerged, such as the People’s Bid for TikTok, led by Project Liberty founder Frank McCourt, supported by investment firm Guggenheim Securities and law firm Kirkland & Ellis. Notable backers include Reddit co-founder Alexis Ohanian and television personality Kevin O’Leary, alongside Tim Berners-Lee and David Clark.
Other notable groups pursuing a bid include the American Investor Consortium, spearheaded by Employer.com founder Jesse Tinsley and featuring Roblox co-founder David Baszucki, Anchorage Digital co-founder Nathan McCauley, and prominent YouTuber MrBeast.
Competing bidders include industry giants like Amazon, AppLovin, Microsoft, and others.
This article will be updated as new developments arise.
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