In a strategic move to address escalating national security concerns, leading U.S. investors in ByteDance, the parent company of TikTok, are negotiating to acquire the app’s U.S. operations. This initiative aims to prevent a potential ban of the popular short-video platform in the United States.
Prominent investment firms such as Susquehanna International Group and General Atlantic, both represented on ByteDance’s board, are at the forefront of these discussions. They are collaborating with private equity firm KKR to formulate a plan that would establish a new U.S.-based entity for TikTok.
This restructuring is designed to reduce Chinese ownership in the new business to below the 20% threshold mandated by U.S. law, thereby mitigating national security risks associated with foreign ownership.
The urgency of these negotiations stems from legislation enacted on January 19, which requires ByteDance to divest its U.S. TikTok operations or face a ban due to national security concerns.
Lawmakers fear that TikTok’s Chinese ownership could enable the Chinese government to access sensitive user data or manipulate content to influence American public opinion. This bipartisan-supported law reflects deep-seated apprehensions about potential espionage and propaganda efforts.
Under the proposed plan, Oracle, a major U.S. technology company, would continue to host U.S. user data, ensuring that this information remains inaccessible from China. This measure is intended to alleviate fears about data security and unauthorized access by foreign entities.
President Donald Trump, who initially supported the establishment of the ban during his first term, has recently pledged to “save TikTok” and maintain its presence in the U.S. He has credited the platform with aiding his 2024 presidential election victory. The app experienced a brief shutdown but was restored shortly after Trump’s inauguration, following his executive order delaying enforcement of the ban by 75 days.
The White House has been deeply involved in these negotiations, playing an active role in facilitating discussions between ByteDance and potential U.S. investors. This level of governmental engagement is unprecedented and underscores the administration’s commitment to resolving the national security issues associated with TikTok’s ownership.
ByteDance’s ownership structure is complex, with global investors holding approximately 58% of the company. The Chinese founder, Zhang Yiming, owns about 21%, and employees of various nationalities, including around 7,000 Americans, hold the remaining 21%. This diverse ownership has added layers of complexity to the negotiations, as stakeholders aim to balance financial interests with regulatory compliance and national security considerations.
The proposed acquisition plan also involves existing U.S.-based investors increasing their stakes in TikTok’s U.S. operations. This strategy is designed to further diminish Chinese influence over the platform and align with U.S. legal requirements. The involvement of established investors like General Atlantic, Susquehanna, KKR, and Coatue is seen as a positive step toward achieving a resolution that satisfies all parties.
As the April 5 deadline approaches, all parties are working diligently to finalize an agreement that ensures TikTok’s continued operation in the U.S. while addressing national security concerns. The outcome of these negotiations will have significant implications for U.S.-China relations, the global technology industry, and the millions of American users who engage with TikTok daily.
