Breaking: TikTok’s U.S. Deal Finally Sealed — Zhang Yiming Scores Another Win

On January 23, TikTok officially unveiled its next-step solution. According to the announcement, operations in the U.S. will be jointly managed by two entities: TikTok U.S. Company and a newly established TikTok U.S. Joint Venture.

TikTok U.S. Company remains 100% owned by ByteDance. The newly formed joint venture, meanwhile, is backed by three management investors—Silver Lake, Oracle, and Abu Dhabi–based fund MGX—each holding a 15% stake. ByteDance retains a 19.9% share, making it the largest single shareholder in the joint venture.

Under this structure, the joint venture will be responsible for sensitive areas such as information security, including U.S. user data protection, algorithm security, and content moderation. The most lucrative businesses—e-commerce, advertising, marketing, and global product connectivity—will continue to be handled by TikTok U.S. Company.

The most critical point lies in ownership of the algorithm. ByteDance has successfully retained full intellectual property rights to TikTok’s core algorithm, granting the joint venture only a license to use it, while charging licensing fees. This is widely seen as the decisive win. The algorithm is the heart of ByteDance’s products, and keeping it firmly in hand means preserving true competitive advantage.

After nearly five years of back-and-forth, TikTok’s long-running U.S. standoff has finally reached a provisional conclusion.

The pressure dates back to 2019, when U.S. authorities first targeted TikTok, fining it USD 5.7 million over allegations of illegally collecting minors’ data. In August 2020, the Trump administration issued executive orders presenting an ultimatum: sell the U.S. business or face a ban.

In April 2024, then-President Biden signed a “sell-or-ban” law, giving ByteDance 270 days to divest its U.S. operations or risk a full takedown. When Trump later returned to office, the uncertainty continued—first granting TikTok a 75-day grace period, then reopening discussions around equity transfers.

At the end of last year and the beginning of this one, as TikTok’s future appeared increasingly uncertain, U.S. users—especially younger audiences—sparked a massive “digital migration.” Tens of millions flocked to Xiaohongshu (RED), even dubbing themselves “TikTok Refugees.”

During that period, Xiaohongshu surged to the top of the U.S. App Store’s daily download rankings and repeatedly topped free app charts across more than 70 countries and regions. Brands quickly followed, posting welcome messages and capitalizing on the unexpected traffic wave for free exposure.

Ironically, an attempt to fragment the internet through regulation ended up propelling another Chinese app to global visibility. For Xiaohongshu, it became an unplanned yet highly effective round of international promotion.

Stepping back, TikTok’s newly announced solution closely resembles Apple’s “Cloud on Guizhou” model. In 2018, to comply with China’s data localization rules, Apple transferred the operation of its China iCloud business to a local state-owned company. Apple retained the technology, while local partners handled data operations.

The key difference is that ByteDance not only remains the largest single shareholder in the new joint venture, but also firmly controls the algorithm, intellectual property, and revenue-generating businesses such as e-commerce and advertising. The structure satisfies U.S. regulatory concerns, preserves ByteDance’s strategic initiative through algorithm licensing, and ensures continued profitability.

All things considered, this appears to be the most balanced solution available.

For ByteDance, the plan allows TikTok to continue operating in the U.S., retain its core algorithm, collect licensing fees, and maintain control over major commercial segments. For U.S. regulators, the joint venture addresses long-standing concerns over information security. For American users—especially younger ones—it simply means they can keep scrolling.

Ultimately, the outcome reinforces a simple truth: truly strong products are not afraid of barriers. Whether it’s Douyin, TikTok, or Xiaohongshu, their powerful algorithms remain the common denominator. With solid technology at the core, there will always be a market—no matter where you go.