TikTok Finally Signs the Damn Divestment Deal and Nobody Knows if It Actually Solves Anything

After literally years of this back-and-forth nonsense TikTok CEO Shou Chew sent out an internal memo Thursday saying they signed binding agreements to create a new U.S. joint venture. The deal supposed to close January 22nd which is one day before Trumps latest extended deadline because of course it is.

Heres the breakdown. Oracle Silver Lake and some Abu Dhabi investment firm called MGX are each getting 15% stakes totaling 45% control. ByteDance keeps 19.9% ownership (just under that 20% foreign ownership limit Congress set). Another 30% goes to existing ByteDance investors. The new entitys called TikTok USDS Joint Venture LLC which is definitely a name someone workshopped for about thirty seconds.

Oracle’s getting the security guard role again – theyll host American user data review the apps code make sure “the algorithms behaving appropriately” whatever that means. This is basically Project Texas 2.0 the same arrangement TikTok proposed years ago that didn’t fly then but apparently works now because reasons.

Trump signed an executive order back in September paving the way for this claiming he had a deal with China. Except Chinas been radio silent on whether they actually approve. Chinese foreign ministry spokesperson just gave the standard “our position is consistent and clear” non-answer Friday which is diplomat-speak for “were not telling you anything”.

And thats the first huge problem. China could still tank this whole thing. They have export control laws that could block ByteDance from transferring the algorithm technology. Trump keeps saying Xi Jinping’s on board but Beijing hasn’t officially confirmed jack. So were all just supposed to trust that itll work out.

Second problem – does this even count as real divestment. ByteDance still owns almost 20% directly. Their affiliates own another 30%. They still get to license the algorithm to the new entity. They still manage e-commerce advertising and marketing for the U.S. platform according to Chews memo. So like… whats actually changing here besides some paperwork.

Republican Rep. John Moolenaar whos chairman of the House China committee already flagged this in September. The law Congress passed didnt just say “sell some shares” – it specifically prohibited ByteDance from having operational ties with any successor company especially around the recommendation algorithm. This deal seems to drive a truck through that requirement.

The algorithm thing is wild. Under this arrangement ByteDance licenses their current AI recommendation system to the new U.S. entity which then uses it to retrain a new algorithm on U.S. user data only. But its still fundamentally ByteDances technology. Theyre still getting paid for it. How is that meaningfully different from before – similar issues to what we saw with other tech industry deals.

Oracles stock jumped 5% in after-hours trading Thursday which tells you everything about who actually wins here. Larry Ellisons been trying to get a piece of TikTok for years – his son David Ellison runs Paramount Skydance which owns CBS so theres all kinds of media consolidation angles floating around too.

The valuation on TikToks U.S. operations is reportedly around $14 billion based on what the White House announced in September. Which seems low honestly for an app with 170 million American users but maybe thats the “please dont ban us” discount pricing.

Speaking of bans – TikTok went dark for like 24 hours back in January right before Trump took office again. Caused a massive uproar from content creators and users. Then Trump promised to delay the ban through executive order and service got restored. Classic Trump move – create chaos then swoop in as the dealmaker who fixes it.

Senator Elizabeth Warren already called out the whole thing on social media saying Trump wants to “hand over even more control of what you watch to his billionaire buddies”. Shes not wrong about the billionaire part – between Ellison Dell and potentially Murdoch this deals got more rich guys fingerprints than a country club coat check.

The national security concerns that started this whole mess back in 2020 supposedly get addressed by having Oracle audit everything and store U.S. data domestically. But Chinas government could still theoretically compel ByteDance to hand over data or manipulate content recommendations. The joint venture structure doesn’t eliminate that risk it just adds corporate layers that might make it slightly harder.

And lets be real – TikToks algorithm is what makes TikTok TikTok. The reason it’s so addictive and keeps people scrolling for hours is that recommendation engine. If ByteDance retains any meaningful influence over how that system evolves even through licensing agreements they still have leverage over what Americans see.

The deal needs regulatory approval from both countries. Trumps administration will rubber-stamp it obviously since they brokered it. But Chinese regulators are the wildcard. Theyve blocked tech deals before over way less sensitive stuff than this.

If this actually closes in January itll end a saga that started when Trump first tried forcing a TikTok sale back in his first term in 2020. Biden kept the pressure on got Congress to pass the divest-or-ban law in 2024 Supreme Court upheld it in January then Trump came back delayed enforcement four times while working this deal.

Absolute masterclass in kicking the can down the road til you can claim victory regardless of whether anythings actually solved. Kind of like how tech companies handle major deals without changing anything fundamental.

170 million Americans use this app. Content creators built entire careers on it. Small businesses depend on it for marketing. And now its fate rests on whether some deliberately vague joint venture agreement satisfies lawmakers who probably dont understand how algorithms work anyway.

Chew says theres “more work to be done” before closing which is corporate-speak for “we have no idea if this actually flies”. The memo reads like cautious optimism from someone whos been through the wringer on this for years.

Meanwhile regular users just want to know if theyll still be able to scroll through dance videos and recipe hacks without the app disappearing. And honestly nobody can give them a straight answer on that yet because this whole deals held together with duct tape and billionaire handshakes.

If it works out Trumpll take a victory lap for solving the TikTok crisis. If it falls apart hell blame China or Democrats or whoever’s convenient. Either way Oracle makes money and the rest of us get to keep doom-scrolling short-form video which I guess counts as American innovation in 2025.