TikTok’s algorithm to be licensed to US joint venture led by Oracle and Silver Lake

The TikTok Inc. building is seen in Culver City, Calif. (AP Photo/Damian Dovarganes, File)

WASHINGTON — Tech giant Oracle will spearhead U.S. oversight of the algorithm and security underlying TikTok’s video popular platform under the terms of a deal laid out Monday by U.S. President Donald Trump’s administration.

All the final details still need to be nailed down among several joint venture partners that will include Oracle, investment firm Silver Lake Partners and possibly two billionaires -- media mogul Rupert Murdoch and personal computer pioneer Michael Dell. The U.S. administration would not have a stake in the joint venture nor be part of its board, according to a senior White House official.

U.S. President Trump is expected to issue an executive order later this week that declares that the terms of the deal meet the security concerns laid out by the law, the senior White House official said. China still needs to sign off on the framework proposal, and any final deal would still require regulatory approval.

The proposal is aimed at resolving a long-running effort to wrest TikTok’s U.S. operations from its Beijing-based parent company, ByteDance, because of national security concerns. TikTok has become a high-profile topic during conversations between Trump and China President Xi Jinping as they continue to spar in a trade war that’s roiled the global economy for much of the year.

For now, the two sides are progressing on a framework deal that calls for a consortium of investors, including Oracle and Silver Lake, to take over the U.S. operations of TikTok in a process that might not be completed until early next year under a timeline laid out Monday by the Trump administration. That could mean TikTok’s divestment might not be completed until a year after it was supposed to be banned under a law that had bipartisan support but was repeatedly bypassed by Trump.

Under the current terms of the proposal, the new U.S. joint venture would receive a licensed copy of the recommendation algorithm that keeps TikTok users endlessly scrolling through clips on their smartphones. Oracle would review, monitor and secure U.S. data flowing through the service.

American officials have previously warned that ByteDance’s algorithm is vulnerable to manipulation by Chinese authorities, who can use it to shape content on the platform in a way that’s difficult to detect.

The algorithm has been a central issue in the security debate over TikTok. China previously maintained the algorithm must remain under Chinese control by law. But a U.S. regulation passed with bipartisan support said any divestment of TikTok must mean the platform cuts ties -- specifically the algorithm -- with ByteDance.

Although the details remain sketchy, a Trump administration official said that the licensed copy will be “retrained” with U.S. data to make sure the system is “behaving appropriately.”

That makes it unclear if the U.S. version of TikTok will look different from what users are seeing in the rest of the world. Any noticeable changes made to a social media platform’s service raises the risk of alienating its audience, said Jasmine Enberg, an analyst for the research firm eMarketer.

“Social media is just as much about the culture as it is the technology, and how users will take to new ownership and potentially a new version of the app is still an open question,” Enberg said.

In a Monday briefing, White House press secretary Karoline Leavitt said the change in control won’t change the experience. “TikTok users in the U.S will be able to see videos posted by users in other countries and vice versa,” Leavitt said.

In a prime example of how a change of control can reshape a once-popular social media platform, billionaire Elon Musk triggered an almost immediate backlash after he completed his US$44 billion takeover of Twitter nearly three years ago.

But Musk made extremely visible changes, including eventually dropping the Twitter brand and changing its name to X. The changes that gradually occur while different data is fed into the U.S. copy of TikTok’s algorithm could be subtle and unnoticeable to most of its audience.

What’s clear, for now, is that both Oracle and Silver Lake will be major players in TikTok’s future in the U.S. if the deal is finalized by the Trump administration.

Founded nearly 50 years ago, Oracle’s success was built on database software that helps manage a wide variety of information crucial to business, and has since expanded into hardware, including data centers that help power artificial intelligence.

Although he no longer runs Oracle as its CEO, company co-founder Larry Ellison remains a top executive while also overseeing an estimated personal fortune of US$390 billion. Ellison, 81, now could be in line to become a behind-the-scenes power player in the media, having already helped finance Skydance’s recently completed US$8 billion merger with Paramount, a deal engineered by his son, David.

Silver Lake has long focused on tech deals, including past buyouts of Dell Computer and the now-defunct video calling service Skype. Michael Dell, who founded Dell Computer, may now be one of investors in the U.S. joint venture overseeing TikTok, according to what Trump told Fox News in a recent interview. Trump also mentioned Murdoch, whose company owns Fox News, as a potential investor in the joint venture.

Other media outlets have reported that another billionaire, venture capitalist Marc Andreessen, is vying to become involved in the investor group. Andreessen was also involved in Silver Lake’s 2009 buyout of Skype.

ByteDance is expected to have a 20 per cent, or smaller, stake in the U.S. joint venture, whose board will be controlled by the U.S. investors. ByteDance will be represented by one person on the board, but that individual will be excluded from TikTok’s security committee.

Chris Megerian, The Associated Press

Liedtke reported from San Ramon, California.