TikTok US deal looks like a major win for ByteDance
Chinese entity retains algorithm source code and will control US e-commerce effort
After years of uncertainty, TikTok has finally confirmed the details of a joint venture that will manage its product in the US.
Let’s go through the details, which will look very familiar based on news reports from recent months.
The joint venture will manage all US user data from TikTok, the algorithm, software security and safety areas that include content moderation. The agreement also covers video editing app CapCut, influencer platform Lemon8 and other TikTok-affiliated apps in the US.
On the ownership side, TikTok owner ByteDance takes a 19.9% stake in the JV with the remainder held by a consortium led by PE firm, Oracle (which will handle the data) and Emirati state-owned investment firm MGX, each of which holds 15%.
The goal of the JV is to quell any concerns around the security of US user data and the potential for outside influence, aka Beijing, to spread misinformation or manipulate content for TikTok’s 200 million-plus users in the US.
I see two major talking points already.
ByteDance retains algorithm source code
The TikTok algorithm is a major reason for the app’s rapid rise into a global social media superpower.
The app has a canny ability to ‘learn’ the type of content each user interacts with.
This might seem obvious but it isn’t easy. Browse through Facebook or X and you’ll see a timeline that’s full of mostly misses with a few hits. Instagram has done a better job, but nothing compares to TikTok.
Relevancy in the algorithm is crucial because it keeps users engaged and converts first-time users into long-term ones. That’s highly attractive to advertisers, e-commerce vendors and others with commercial interests.
ByteDance has used the stickiness of TikTok as a launchpad for a range of other services and apps like CapCut, which has an estimated 200 million users worldwide, and Lemon8, which is nearly 20 million users worldwide with more than 1 million in the US alone.
Today’s announcement says the JV will “retrain, test and update” the algorithm for the US market, but it will be working from the code that TikTok itself develops.
Maintaining interoperability with the global product let alone tweaking it to your desire is no easy task, and it’s certainly something that’s never been done at this scale nor by a consortium of investors.
Does that mean there will be outages, bugs and a lack of support for some features? We shall see.
ByteDance has the keys to making money
Crucially, the deal also gives TikTok control over “certain commercial activities,” which include the major money-making areas like e-commerce, advertising and marketing.
This is a big deal. TikTok Shop has been one of the biggest focuses of ByteDance in recent years.
TikTok’s e-commerce business is estimated to have reached $60 billion in sales worldwide in 2025, thanks to its well-established business in Southeast Asia and its growing presence in the US.
The balance of power may well tip this year, though. Emarketer forecasted TikTok Shop US could cross $23 billion this year which would make it the largest market based on sales.
Hitting that target would represent 50% year-on-year growth and, symbolically, give TikTok Shop a larger US e-commerce business than Target, Costco, Best Buy and Kroger. Not bad since it only started 2.5 years ago.
Revenue-sharing details haven’t been shared, but this is clearly a huge win for ByteDance even if it shares the spoils.