BYTEDANCE, the owner of TikTok, will become the largest single shareholder in a new U.S. data security joint venture that will manage the short video platform’s local operations, while retaining full intellectual property rights to TikTok’s core algorithm, according to an internal staff memo.

As detailed in a Thursday email from TikTok CEO Shou Zi Chew, ByteDance and TikTok have signed binding agreements with Oracle, Silver Lake, and MGX Fund Management to establish TikTok U.S. Data Security (USDS). ByteDance will hold a 19.9% stake in the venture, which is scheduled to close Jan. 22.

“We have signed agreements with investors regarding a new TikTok U.S. JV, enabling over 170 million Americans to continue discovering a world of endless possibilities as part of a vital global community,” Chew wrote. “With these agreements in place, our focus must stay where it's always been — firmly on delivering for our users, creators, businesses, and the global TikTok community.”

Under the agreement, 50% of the new U.S. joint venture will be owned by a consortium of investors including Oracle, Silver Lake, and the Emirati investment firm MGX, with each of the three holding a 15% share. Another 30.1% will be held by affiliates of existing ByteDance investors. The venture will be governed by a new, seven-member board of directors, with a majority of U.S. members.

TikTok USDS will oversee U.S. data protection, algorithm security, content moderation, and software assurance — operating as a non-profit entity designed to comply with U.S. national security requirements.

Responsibilities include safeguarding user data in Oracle’s U.S.-based cloud environment, retraining the content recommendation algorithm to prevent external manipulation, and maintaining oversight of the local app’s software integrity and content policies.

ByteDance will retain ownership of TikTok’s algorithm IP, licensing it to the joint venture in exchange for fees. Revenue-sharing arrangements will support the JV’s operational costs.

Other U.S.-based TikTok entities under ByteDance will continue to manage global product interoperability and commercial functions such as e-commerce, advertising, and marketing — the platform’s primary revenue streams.

Analysts have noted that the structure resembles Apple’s “Cloud on Guizhou” operating model in China, though Apple does not hold equity in that venture. The deal follows an executive order issued by former U.S. President Donald Trump on Sept. 25 and aligns with the Protecting Americans From Foreign Adversary Controlled Applications Act passed last year. The law requires social media apps owned by companies from certain countries, including China and Russia, to operate independently, with parent firms holding no more than 20% equity.(SD-Agencies)