Newscasts - TikTok's future uncertain after US joint venture deal, says analyst

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19/12/2025 19:01

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Source: 'Reuters - Business videos'

Description: TikTok's Chinese owner, ByteDance, has signed binding agreements to hand control of the short video app's U.S. operations to a group of investors, including Oracle, in a big step toward avoiding a U.S. ban and ending years of uncertainty. Alex Cohen has more.

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Video Transcript:

The deal to hand control of TikTok芒聙聶s US operations to a group of investors, including Oracle, marked a major turning point after years of uncertainty over the future of the popular video app. But former Peking University business professor Jeffrey Towson says it raises new questions about the new entity芒聙聶s ability to compete.

It芒聙聶s not obvious what happens with this company going forward because you just went from a global platform to a regional one. But your competitors are still global. Their primary competitors are YouTube and Facebook, Instagram Reels. Well, if they芒聙聶re separate, then they are dramatically smaller than the global giants, which was not the case last month. So, that has some interesting sort of business strategy and competition questions that get raised.

The deal is aimed at avoiding a US ban of the short video app, which is used regularly by more than 170 million Americans. It comes after a years芒聙聭long saga to force TikTok芒聙聶s Chinese owner ByteDance to sell its US operation, which began in August 2020, when President Donald Trump first tried unsuccessfully to ban the app over US national security concerns. Financial terms of the deal, announced in an internal memo by TikTok seen by Reuters, were not disclosed. The White House said in September the new joint venture would operate TikTok芒聙聶s US app. But questions remain about the deal, including the business relationships between the new joint venture and ByteDance, which will still own about 20% of the US company. Sources told Reuters in September that ByteDance would also own a separate division that would control the revenue芒聙聭generating operations such as e芒聙聭commerce and advertising. Those arrangements form the deal framework announced on Thursday, two sources with knowledge of the matter told Reuters on Friday.

The big question is still, is the Chinese government going to approve this? Because they芒聙聶ve never actually said that they would. The Trump Administration has said it芒聙聶s been approved by them, but we芒聙聶ve never actually heard anything from the Chinese government formally. Now, who knows what芒聙聶s going on behind closed doors? In theory, that could happen quite quickly, or it could emerge as a problem. I suspect it芒聙聶s probably not a problem, but we don芒聙聶t actually know the other major party at the table in terms of the decision芒聙聭making here.

Oracle will own the majority of the joint venture along with private equity group Silver Lake and Abu Dhabi芒聙聯based MGX. Shares of Oracle rose as much as 8% in Friday morning trading.