White House-led discussions regarding the future of TikTok are centering on a plan for the largest non-Chinese investors in parent company ByteDance to increase their stakes and take over the short video app's U.S. operations, according to sources familiar with the negotiations.
The proposal involves creating a U.S.-based entity for TikTok and reducing Chinese ownership to below the 20 percent threshold mandated by U.S. law, thus safeguarding the app from being banned. Jeff Yass' Susquehanna International Group and Bill Ford's General Atlantic, both represented on ByteDance's board, are leading negotiations with the White House on this initiative. Private equity firm KKR is also involved.
The future of the app, used by nearly half of all Americans, has been uncertain since the implementation of a law on January 19 that requires ByteDance to sell TikTok or face a ban on national security grounds. This legislation, passed with bipartisan support, cites concerns that TikTok's ownership makes it susceptible to the Chinese government, potentially allowing Beijing to use the app for influence operations against the United States. Critics argue that the ban threatens to unlawfully restrict access to foreign media, violating the First Amendment.
TikTok has contended that U.S. officials have mischaracterized its ties to China, asserting that its content recommendation engine and user data are stored in the United States on cloud servers managed by Oracle. The company further claims that decisions regarding content moderation for American users are made domestically.
Under the proposed plan, Oracle would continue to hold U.S. user data and provide guarantees that it is not accessible from China. Representatives from TikTok, ByteDance, Susquehanna, Oracle, and the White House could not be immediately reached for comment, while General Atlantic and KKR declined to provide statements.
According to prior reports, U.S. ByteDance investors are seeking to buy out Chinese investors in a deal for a spun-off TikTok U.S. business, with investment firm Coatue also mentioned as a participant.
Legal filings from TikTok last year indicate that global investors hold approximately 58% of ByteDance, with the company’s Singapore-based founder Zhang Yiming owning around 21% and employees from various nationalities, including approximately 7,000 Americans, owning the remaining shares.
The White House has closely monitored these negotiations, effectively acting as an investment banker in this process. The former administration had initially supported the ban during its first term but has since expressed a commitment to preserving TikTok in the U.S., linking its continued presence to the 2024 presidential campaign.
The app briefly went offline after the enforcement of the ban was postponed, returning shortly after an executive order was signed delaying enforcement by 75 days. Recent statements from the former president indicate that his administration has been in contact regarding a prospective deal, although specific details remain undisclosed.
In addition, other groups are vying to acquire the app, including an investor group led by billionaire Frank McCourt and another involving YouTube star Mr. Beast. Reports have previously noted that the proposed deal would involve leveraging Oracle alongside existing ByteDance investors to secure control over TikTok's operations while allowing ByteDance to maintain a stake in the company. Data collection and software updates would be supervised by Oracle under an arrangement that has been in place since negotiations during the previous administration.