TikTok Strikes Deal for New U.S. Entity: Implications for the Global Platform Market

End of Six-Year Legal Saga and Reshaping of the Short-Form Platform Ecosystem

Executive Summary

On January 22, TikTok officially announced that its Chinese parent company ByteDance has reached an agreement with a group of non-Chinese investors to establish a new U.S. entity. This deal concludes a six-year legal saga that began with U.S. government regulatory attempts in 2019, followed by congressional app ban legislation and a Supreme Court ruling.

The new entity will be more than 80% owned by non-Chinese investors including Oracle, MGX, and Silver Lake, while ByteDance's stake will be reduced to under 20%. However, ByteDance will retain the core recommendation algorithm and license it to the new entity, leaving questions about whether national security concerns have been fully addressed.

1. Deal Structure and Key Investor Analysis

1.1 Ownership Structure

Adam Presser, TikTok's former head of operations, will serve as CEO of the U.S. TikTok. The majority of the seven-member board will be American, with TikTok's global CEO Shou Chew also holding a board seat.

1.2 Valuation

Vice President JD Vance indicated in September that the U.S. TikTok would be valued at approximately $14 billion. This represents roughly 3% of ByteDance's overall valuation of $480 billion in private markets, suggesting significant value dilution from the U.S. market separation. However, given TikTok's more than 200 million monthly active users (MAU) in the United States, there remains potential for revaluation as the advertising revenue model matures and e-commerce capabilities expand.

2. Regulatory Background and Timeline

U.S. government attempts to regulate TikTok date back to 2019. Universities, military branches, the vast majority of House representatives, and both the Trump and Biden administrations have consistently pursued TikTok bans or restrictions.

Lindsay Gorman, a former senior adviser in the Biden administration, observed: "We've gone round and round and ended up not too far from where we started." The 2020 Oracle-centered consortium structure has essentially materialized six years later.

3. Key Issue: Algorithm Licensing Structure

The most contentious aspect of this agreement is the structure whereby ByteDance retains TikTok's core recommendation algorithm and licenses it to the U.S. entity. The 2024 law required the termination of all "operational relationships" between ByteDance and TikTok, but interpretations vary on whether an algorithm license satisfies this requirement.

Michael Sobolik, a senior fellow at the Hudson Institute, stated: "They may have saved TikTok, but the national security concerns are still going to continue." Given that China's 2020 move to include algorithms and source code in its export control list remains in effect, analysts note that Beijing's indirect influence may not be completely severed.

However, some argue that securing data sovereignty is the more significant achievement. If Oracle manages U.S. user data and content moderation transfers to the U.S. entity, substantial national security risks could be mitigated in practice.

4. Political Implications and Platform Neutrality Concerns

Concerns about platform political neutrality have emerged as several new investors maintain close ties with President Trump. Oracle co-founder Larry Ellison is known to have a close relationship with the president and reportedly lobbied him directly regarding his son David Ellison's bid to acquire Warner Bros. Discovery. MGX has also conducted business with the Trump family's cryptocurrency firm, World Liberty Financial.

Anupam Chander, a law and technology professor at Georgetown University, said the TikTok deal allowed for "more theoretical room for one side's views to get a greater airing," adding: "My worry all along is that we may have traded fears of foreign propaganda for the reality of domestic propaganda."

President Trump celebrated the announcement on his social media platform Truth Social, calling it a "dramatic, final, and beautiful conclusion," and adding: "I only hope that long into the future I will be remembered by those who use and love TikTok."

5. Industry Impact Analysis

5.1 Short-Form Platform Competition

With TikTok's continued presence in the U.S. market now assured, intensified competition with platforms like YouTube Shorts and Instagram Reels is expected. Over the past several years, while TikTok's potential ban loomed, Meta and Google aggressively expanded their short-form content market share. However, with the TikTok exit scenario off the table, creators and advertisers are likely to recalibrate their platform diversification strategies.

5.2 Creator Economy

TikTok creators are now free from six years of uncertainty. Naomi Hearts, a 28-year-old content creator in Los Angeles who twice traveled to Washington as part of TikTok's lobbying efforts, said she felt "detached" from the platform after years of upheaval. Whether this agreement will restore creator trust in the platform remains to be seen.

5.3 Implications for K-Content

Given TikTok's significant contribution to the global spread of Korean content including K-pop and K-drama, the platform's continued presence in the U.S. market sends a positive signal to the K-content industry. However, changes in investor composition and content moderation policies could alter algorithm exposure patterns, necessitating that K-entertainment companies pursue platform diversification strategies. Alternative platform expansion strategies, particularly into FAST (Free Ad-Supported Streaming TV) channels, are expected to become increasingly important.

6. Outlook

While this agreement effectively ends the TikTok U.S. market exit scenario, several uncertainties remain. First, there is potential for legal challenges questioning whether the algorithm licensing structure aligns with the legislative intent of the 2024 law. Second, how content policies and recommendation algorithm operations will evolve under the new board and management warrants observation. Third, Beijing's response to this agreement bears watching. The Chinese government has not publicly commented, though Trump administration officials have indicated they secured Beijing's tacit approval.

Immediate changes to user experience are expected to be limited. However, gradual shifts in algorithm personalization, advertising strategies, and e-commerce feature expansion are anticipated over the medium to long term.

Conclusion

The TikTok U.S. entity agreement is poised to be recorded as a symbolic case study in the U.S.-China technology hegemony competition. The six-year regulatory drama transcended a simple app ban debate, highlighting key digital-era issues: data sovereignty, algorithmic transparency, and platform governance. The process of finding balance between national security and platform innovation, creator economy and political neutrality, will serve as a precedent for global platform regulation going forward.

Source: The New York Times, January 22, 2026

Analysis by: K-EnterTech Hub