TikTok’s future in the U.S. took a major turn after President Donald Trump approved a new deal that creates a U.S.-based joint venture — but with ByteDance, TikTok’s Chinese parent, still playing a central role. While American investors will control the app’s operations, ByteDance will reportedly receive about half of TikTok U.S.’s profits.
Key Points
ByteDance keeps control of profits: Despite ceding majority ownership, ByteDance could capture ~50% of TikTok U.S. profits through licensing fees and its minority equity stake.
Valuation lower than expected: The deal values TikTok U.S. at $14 billion, well below analyst estimates of $35–60 billion.
National security debate continues: Lawmakers question whether the structure meets U.S. divestiture requirements.
Why is TikTok U.S. valued at only $14 billion?
Vice President JD Vance announced the U.S. TikTok entity would be valued at $14 billion — far less than prior Wall Street estimates of up to $60 billion. Analysts say this low price reflects ByteDance’s continued financial claim. Through licensing TikTok’s algorithm — the “secret sauce” that drives engagement — ByteDance may capture as much as 20% of incremental revenue plus profits tied to its remaining stake.
For context, ByteDance’s global revenue in 2024 was $155 billion, with international operations — led by TikTok U.S. — generating $40 billion. This shows why even a 50% profit share from U.S. operations is a major win for the Chinese parent.
Who will own TikTok in the U.S.?
The new ownership structure splits TikTok’s U.S. business into two parts:
Joint venture (majority U.S.-controlled): Handles user data, algorithms, and content moderation. Oracle will oversee cloud security. Investors include Oracle (ORCL), Silver Lake, and Abu Dhabi’s MGX.
ByteDance-owned division: Keeps revenue-generating operations such as e-commerce and advertising.
ByteDance’s equity stake is capped at 19.9%, but licensing arrangements could lift its economic returns much higher. American investors together will hold about 80% of the entity, though not of the profits.
Does this deal resolve national security concerns?
Not entirely. The 2024 law required ByteDance to divest TikTok’s U.S. operations or face a ban. Critics argue that leasing the recommendation algorithm back from ByteDance undermines the spirit of that requirement. Rep. John Moolenaar, chair of the House China Committee, has already pledged oversight, emphasizing that operational ties between ByteDance and the new entity must be severed.
Security experts warn the deal may be more of a “cosmetic fix” than a true separation, leaving questions about long-term data safety.
What it means for investors
For retail investors, TikTok’s restructuring shows how political risk can impact valuations. A business once valued as high as $60 billion is now pegged at just $14 billion. Oracle and Silver Lake may benefit strategically by gaining influence over a top social media platform, but ByteDance remains the biggest winner financially.
Investors should also note that TikTok remains subject to regulatory and geopolitical uncertainty. Any change in U.S.–China relations, congressional oversight, or Chinese government approval could reshape the deal again.
Conclusion
TikTok’s U.S. deal is less about divestiture and more about compromise. ByteDance has given up operational control while preserving a powerful financial stake. For American investors, this is both a chance to participate in one of the most influential tech platforms — and a reminder of how politics can redefine corporate value overnight.
FAQs
Is TikTok really banned in the U.S.?
No, TikTok is not banned. Instead, the U.S. government required ByteDance to sell TikTok’s U.S. operations to American investors. This deal allows TikTok to keep operating, but its structure is still under review.
Why is TikTok’s U.S. business valued at only $14 billion?
The $14 billion figure is far below analyst expectations. The lower valuation reflects ByteDance’s ability to capture around 50% of TikTok’s profits through licensing fees and revenue-sharing agreements, making the business less valuable to new U.S. investors.
Who controls TikTok’s algorithm now?
The new joint venture will operate TikTok’s U.S. algorithm, but the technology itself is still licensed from ByteDance. Oracle is tasked with monitoring and securing the code, though critics argue this setup still gives ByteDance influence.
Will ByteDance still make money from TikTok U.S.?
Yes. Even with less than 20% ownership, ByteDance could earn about half of TikTok U.S.’s profits through licensing and profit-sharing agreements.
What does this deal mean for Oracle stock?
Oracle gains a strategic role in managing TikTok’s U.S. operations and cloud infrastructure. While financial details for Oracle’s earnings are unclear, the partnership could enhance its visibility in consumer technology and cybersecurity.