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Under the new agreement, TikTok will form a new U.S. entity with new U.S. investors and existing investors.
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The new venture will have a seven-member board of directors, with the majority of board members from America.
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One large U.S. cloud stock is a major investor in the new venture and a key company hoping to drive the artificial intelligence revolution.
To the relief of over 200 million American users, the popular social media platform TikTok has struck a deal to create a new American company that will keep it alive and well.
A new U.S. joint venture backed by several large investors will be formed, with a seven-member board of directors composed mainly of U.S. members. TikTok nearly got banned in the U.S. after a bipartisan law passed in 2024 required the platform’s parent company, the China-owned ByteDance, to transfer ownership. U.S. lawmakers were concerned about national security and privacy.
Major investors behind the new venture include MGX, an Abu Dhabi-based investment company; the large private equity firm Silver Lake; and the large public company Oracle (NYSE: ORCL), each of which will own 15% of the new venture.
And this is the $500 billion stock that investors need to know about. Market watchers have likely heard of Oracle, given its long history of providing cloud solutions and its more recent emergence as a major supplier of AI data centers.
In recent months, Oracle has signed several massive contracts to supply data centers for large hyperscalers. The stock has whipped up and down as investors have tried to figure out the likelihood of all these contracts coming to fruition and what returns will look like. The company’s investment in the new TikTok venture might seem like an odd move, but it solidifies a key customer.
Oracle has served as TikTok’s data provider since 2020, so this new deal solidifies Oracle’s existing business with TikTok and also names Oracle as TikTok’s “trusted security partner.”
The deal is important because the company has faced significant scrutiny in recent months over its emerging AI data center business, so solidifying a large customer that is different in that it’s a social media company driven by significant consumer traffic is a positive for the company. TikTok is also an incredibly valuable private company, so if it ever goes public or gets acquired, Oracle could benefit financially as well, given its stake.
Oracle has been one of the most controversial AI companies in the stock market. The company’s September earnings report sent the stock soaring when Oracle revealed over $450 billion in remaining performance obligations tied to new AI data center contracts with companies like OpenAI.
