The agreement reached between ByteDance, the Chinese parent company of TikTok, and several American institutional investors implies that Oracle will take over the custody, management and security of TikTok’s recommendation algorithm in the United States, thereby changing the control structure over the artificial intelligence system of the popular social network. According to Bloomberg, the operation will result in the creation of a majority-owned American company that will begin operating in the country on January 22, 2026, in accordance with regulatory requirements established by North American authorities to avoid direct monitoring of the data and operational security of users in the United States by a foreign company.
According to Bloomberg, TikTok informed its employees of the upcoming organizational transformation in an internal statement, calling the move one of the most significant changes in the management of its local operations. The text states that ByteDance has entered into binding agreements with Oracle, Silver Lake and the MGX fund (based in the United Arab Emirates) for 15 percent stake each, while other institutional investors linked to previous rounds will contribute 30.1 percent. ByteDance will retain 19.9 percent of the new partnership. Almost half of the partners had not previously invested in TikTok, underscoring the dominance of US capital in the restructuring, according to Bloomberg.
The restructuring comes amid ongoing regulatory pressure from the US, sparked by concerns about security and access to users’ personal data given the platform’s Chinese ownership. Bloomberg states that both the US government and the companies involved have discussed the possibility of a complete ban on TikTok on US soil over the last year. The authorities wanted to guarantee that neither ByteDance nor other foreign companies could directly intervene in the management, custody and processing of sensitive information of millions of users resident in the country.
The renewed entity will be structured based on TikTok US Data Security (USDS), a company previously committed to protecting U.S. users’ data and complying with federal regulatory frameworks. Once established, this organization will operate autonomously and will be responsible for protecting personal data, managing and monitoring the content recommendation algorithm, moderation policies and overseeing software development with a focus on American users, Bloomberg reports.
The agreement also implies a clear delineation of powers between global and locally administered areas. According to Bloomberg, international activities such as e-commerce, advertising and parts of US marketing will continue to be under the control of other TikTok subsidiaries integrated into the global structure, while aspects sensitive to US regulations will remain the responsibility of the new company, which was created with majority domestic capital and operational control delegated to Oracle.
United States Treasury Secretary Scott Bessent had expected weeks earlier that there would be an agreement on the key terms of the asset transfer, although exact details only emerged with the publication of the internal document cited by Bloomberg. The transfer of the core artificial intelligence algorithm – the system that determines the content suggested to users – will be one of the pillars of this process, as ByteDance has so far maintained its supervision and development from China. The innovation lies in the fact that Oracle monitors and adapts this algorithm to the technical and legal standards in force in the United States.
One of the main goals of the reform is to ensure an effective barrier to ByteDance’s influence and control in TikTok’s US business. Bloomberg noted in its reporting that the U.S. ownership structure is consistent with Washington’s demands that data management, content moderation, and technology development and implementation follow domestic processes and regulations.
The new model involves transferring the license via the algorithm to the US subsidiary, while Oracle is responsible for securing and updating it in accordance with local legislation. This reduces ByteDance’s stake to less than 20 percent of the shares of the incorporated company, limiting any decision-making ability on the strategic aspects of the platform in the United States.
Bloomberg explained that the Trump administration initially promoted regulatory guidelines to structure this corporate restructuring, and implementation of the measures was postponed several times as international negotiations progressed. The completion of the process is in response to the need to introduce additional safeguards in the control and use of personal data that meet the authorities’ most stringent privacy and digital security requirements.
The transfer process and formation of the company are subject to audits and audits by both U.S. federal authorities and the principal shareholders involved. According to Bloomberg, compliance with the agreements and the autonomous operation of the new structure depend on strict compliance with the technical and legal obligations contained in the agreement.
The legal overhaul also addresses issues of technological competition and personal data management that have characterized relations between Washington and Beijing in recent years. Incorporating oversight and accountability mechanisms at all levels of technology interface and day-to-day management helps address the requirements of sovereignty and protection of information – motivations that have been repeatedly expressed by U.S. regulators. Bloomberg stated that this model could serve as a reference for other international platforms operating in the US to adapt their operating structures in light of the growing demands from the geopolitical environment and the debate over the cross-border use of data.
The reconfiguration process and its consolidation by the January 2026 deadline remain under constant review by US regulators, Bloomberg concluded in its report on the significant changes in the management and protection of the TikTok algorithm in the North American country.
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