[The TikTok logo. Photo Credit: Pixabay]

TikTok has struck a deal, supported by President Donald Trump, to spin off its US operations and create a new corporation with a group of primarily American investors.

Although the purchase has not yet been finalized, it moves TikTok one step closer to assuring its long-term future in the United States. 

This development follows a regulation enacted last year that mandated the US version of the app be spun out from its parent company, ByteDance, or face a ban in the US. 

President Trump repeatedly delayed enforcing the ban while pursuing a deal to transfer control of the popular app to American ownership.

TikTok has finalized agreements with investors for a new TikTok U.S. joint venture, allowing over 170 million American users to continue enjoying the app as part of an important global community.

Under the terms of the agreement, the US TikTok app will be controlled by a new joint venture, with Oracle, Silver Lake, and Emirati-backed investment group MGX eachholding a 50% stake. 

Affiliates of certain existing investors in ByteDance will collectively own slightly more than 30% of the joint venture, while ByteDance will retain 19.9%.

While there are still huldles to clear before the agreement is finalized the parties are working to reach a conclusion by January 22, 2026.

In September, the Trump administration announced that it had reached an agreement with China to transfer control of TikTok's US operations to a group of primarily American investors. 

President Biden issued an executive order designating the transaction as a qualified divestment and deferring the implementation of the ban-or-sale law for 120 days to allow for the transaction's completion.

The US law, which went into force in January, prohibits TikTok unless ByteDance sells around 80% of its US assets to non-Chinese investors.

The new firm would retrain TikTok's algorithm on using US user data, while Oracle will monitor the storage of American data. 

The US joint venture will also be responsible for content moderation for US consumers. 

However, the ByteDance-controlled worldwide TikTok business will continue to oversee e-commerce, advertising, and marketing for the new US site.

The Chinese government is expected to approve the agreement before it can be closed. 

While Trump claims Chinese President Xi Jinping supports the deal, Beijing has not publicly confirmed his assent. 

The transaction is also expected to require regulatory approval from both the US and China.

When asked if China had approved the deal and for comments on the agreement to establish the new US joint venture, the Chinese foreign ministry issued a press release referring to the relevant Chinese authorities and stating that China's position on the TikTok problem is consistent and clear.

The United States government attempted to ban or force the sale of the social media app TikTok, citing national security worries about its ties to its Chinese parent company, ByteDance.

Concerns have been raised that the Chinese government could leverage Chinese national intelligence legislation to compel ByteDance to pass over sensitive data obtained from TikTok's over 170 million American users. 

This data could include location information and personal information, which critics claim could be used for espionage or spying.