The move is part of a deal that would see the Chinese-owned video-sharing platform sold to a group of U.S. investors, Bloomberg reported Monday (Sept. 22), citing an unnamed source.
The arrangement would ensure the new buyers control TikTok’s recommendation software after its parent company, ByteDance, divests itself. The new owners would lease a copy of the algorithm from ByteDance that Oracle would retrain “from the ground up,” the source said, per the report.
U.S. user data would be kept in a secure cloud managed by Oracle with controls designed to keep out foreign adversaries, including China, the report said. ByteDance would not have access to U.S. subscriber information or any control over the algorithm in the U.S.
TikTok was facing a ban in the U.S. following the passage of a national-security-focused law last year requiring Beijing-based ByteDance to find a new owner for the platform.
ByteDance had until Jan. 19 of this year to work out a deal, although President Donald Trump, who credited the platform’s young user base with helping him win last year’s election, gave the company multiple extensions to find a new buyer.
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TikTok U.S.’s new owners are a group of investors led by Oracle, Silver Lake and Andreessen Horowitz, who will hold a roughly 80% stake in the company, with ByteDance shareholders controlling the remainder, but not enough to steer the company.
Trump said in a Fox News interview Sunday (Sept. 21) that Lachlan Murdoch and Rupert Murdoch of the Murdoch media empire would also “probably be in the group” controlling TikTok, The Wall Street Journal reported Monday.
The U.S. government is expected to receive a multibillion-dollar fee for brokering the deal, the latest in a series of Trump administration deals with private-sector companies that have caused concerns among legal and ethics experts, the report said.
“The algorithm, the unseen engine behind TikTok’s influence, will be licensed from ByteDance and re-created by U.S. engineers,” PYMNTS wrote last week.
This marks a shift from earlier plans, in which TikTok would have moved U.S. users to a new version of the app, code-named “M2,” ahead of a planned sale. It would also have required users to download a separate app. The current framework involves a “different approach, preserving the front-end app while reworking the infrastructure that governs ownership, data and algorithms,” the PYMNTS report added.
