TikTok Completes Deal to Create U.S. Entity and Avert Ban

After the years-long threat of a ban, TikTok has finalized the deal to create a U.S. entity that will allow the company to continue operating in the United States, reports Associated Press. The new version will operate under “defined safeguards that protect national security through comprehensive data protections, algorithm security, content moderation and software assurances for U.S. users,” the company said in a statement. The original Chinese parent company, ByteDance Ltd., will still retain a 19.9% stake in the business.

The company signed agreements with major investors—tech firm Oracle, Silver Lake, MGX, and more—to form TikTok USDS Joint Venture. Adam Presser, TikTok’s previous head of operations, trust, and safety, will lead the new entity as its CEO, alongside a seven-member, majority-American board of directors that includes TikTok’s CEO Shou Chew. As the BBC reports, TikTok claims that the algorithm and U.S. users’ data will be protected in “Oracle’s secure US cloud environment.”

If the sudden TikTok ban feels like a long time ago, that’s because it took place almost exactly one year ago. On January 17, 2025, the Supreme Court of the United States unanimously upheld a federal law that would ban TikTok unless ByteDance Ltd. initiated a sale by Sunday, January 19. The following night, TikTok went dark, users could no longer see content, and major app stores removed the platform for download. Just two days later, though, TikTok restored its service in the U.S. after Donald J. Trump, then President-elect, claimed he would pause the ban by executive order on his first day in office. The federal law authorized the sitting president to grant a 90-day extension only if there was “significant progress” in a sale to a non-Chinese-owned company, but ByteDance repeatedly stated it would not sell, despite investors making offers.

During his first presidency, Trump threatened to ban TikTok several times, and at one point used an executive order to attempt to do so. TikTok replied to the threats by suing the U.S. government in August 2020. Shortly after assuming presidency in 2021, Biden signed an executive order revoking Trump’s ban on TikTok, and instead ordered the Secretary of Commerce to investigate if the app posed a threat to U.S. national security. The following year, reports confirmed that ByteDance employees in China could access private U.S. user data. Afterwards, TikTok announced that all U.S. user traffic would instead be routed to Oracle Cloud, the American tech company’s servers.

In April 2024, Biden signed a bipartisan TikTok bill, giving ByteDance six months to sell its controlling stake in the app or be banned in the U.S., but TikTok filed a lawsuit to block the law, calling it an “extraordinary intrusion on free speech rights.” The court ultimately countered, writing, “Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok’s data collection practices and relationship with a foreign adversary.”