President Trump took a significant step on Thursday, signing an executive order intended to clear the path for a consortium of investors to establish an American version of TikTok. This new entity would operate independently of its current Chinese parent company, ByteDance, ensuring the popular app can continue serving its vast user base in the United States.
For months, the administration has been actively seeking non-Chinese investors for this U.S.-based TikTok venture. Vice President JD Vance confirmed that the new company is expected to be valued at $14 billion.
This initiative is a direct response to a federal law enacted in January, which banned TikTok in the U.S. over fears that Beijing could exploit the app to access sensitive American user data or disseminate propaganda. While Mr. Trump has previously postponed the ban’s enforcement multiple times, this latest order sets a mid-January deadline for the deal’s finalization.
Although the White House has not yet revealed the full ownership structure of the proposed U.S. TikTok, several prominent allies of Mr. Trump are among the potential investors. Oracle, the software giant co-founded by billionaire Larry Ellison, is confirmed to acquire a stake. Additionally, Mr. Trump has indicated that media mogul Rupert Murdoch is involved, with sources close to the discussions suggesting investments would be channeled through Fox Corporation.
Adding a surprising twist to the negotiations, the Emirati investment firm MGX is also expected to join the coalition, according to two individuals familiar with the talks. This development comes despite Mr. Trump’s earlier statements emphasizing “American investors, American companies, great ones, great investors.”
Should this deal be successfully implemented, it would finally remove the cloud of uncertainty that has hung over TikTok for years. Washington policymakers have expressed consistent apprehension regarding the app’s ties to China, even as its American user base has swelled to over 170 million. This prolonged battle over TikTok’s future has caused considerable anxiety among users and lawmakers alike.
The proposed $14 billion valuation for the American TikTok is notably lower than ByteDance’s overall valuation, which the startup tracker CB Insights estimates at a staggering $300 billion.
The involvement of MGX also highlights the growing financial influence of the Emiratis in support of Mr. Trump. In recent months, representatives from the Gulf State have pledged to inject $1.4 trillion into the U.S. economy over the coming decade. Furthermore, MGX previously announced a $2 billion deposit into a cryptocurrency startup founded by the Trump family.
These discussions surrounding TikTok and the MGX crypto investment unfolded against a backdrop of the Emiratis seeking to acquire crucial artificial intelligence chips. The Biden administration had previously restricted the Gulf State’s access to these chips due to concerns about its connections with China. However, the Emiratis actively lobbied the Trump administration to revise U.S. policy, enabling them to construct data centers and emerge as a significant force in the A.I. sector.
During Mr. Trump’s visit to Abu Dhabi in May, his administration reached an agreement to sell 500,000 A.I. chips to the Emiratis. These chips are destined for a data center campus envisioned to be among the largest globally.
Sources familiar with the discussions indicate that MGX’s potential investment in TikTok has been under consideration for months. This firm, along with several others involved in the TikTok deal, stands to benefit from the Emiratis’ ambitious data center project. Oracle, for instance, is set to construct a data center in the Emirates with an estimated cost of $20 billion. Similarly, the investment firm Silver Lake holds a stake in G42, an Emirati A.I. company and one of the partners in this large-scale project.
While there is no definitive proof that the chip deal was contingent on other transactions, two Democratic senators have requested that inspectors general at the Commerce and State Departments investigate whether Trump administration officials breached ethical guidelines in the various multibillion-dollar agreements with the Emiratis.
The executive order outlines a plan where ByteDance would license its core algorithm to the new American TikTok company. This new entity, controlled by a coalition of non-Chinese investors, would see ByteDance’s ownership diluted to below 20 percent, thereby satisfying the legal requirements for divestiture.
According to two people familiar with the negotiations, Oracle, MGX, and Silver Lake would collectively hold approximately 45 percent of the new company. Other investors, including Michael Dell, CEO of Dell Technologies (as stated by Mr. Trump), are expected to acquire smaller stakes. A key aspect of the plan is for Oracle to ensure the protection of U.S. user data.
When contacted for comment, MGX, Oracle, and Silver Lake did not offer immediate responses. Fox Corporation and BDT & MSD Partners, a Dell-backed investment firm, declined to provide comments.
Mr. Trump has previously indicated that Chinese leader Xi Jinping has endorsed the framework for this deal. While an official statement from a Chinese state-run news agency provided a more ambiguous account, Mr. Xi did appear to favor a commercial resolution for TikTok.
The federal law governing TikTok grants the president the authority to determine what constitutes a “qualified divestiture” that aligns with its conditions. Mr. Trump’s executive order on Thursday explicitly states that the proposed investor coalition framework meets these requirements.
The order specifies: “It will be majority-owned and controlled by United States persons and will no longer be controlled by any foreign adversary, since ByteDance Ltd. and its affiliates will own less than 20 percent of the entity, with the remainder being held by certain investors.”
However, the proposed plan has not been without its critics in Washington. John Moolenaar, the Republican chairman of the House Select Committee on China, expressed concerns in a social media statement. He suggested that the licensing arrangement could still grant China continued “control or influence” over the new TikTok entity.
Echoing these sentiments, Michael Sobolik, a senior fellow at the Hudson Institute specializing in U.S.-China relations, highlighted that the White House’s executive order would only intensify these questions. He pointed to a clause stating that “the divestiture includes intense monitoring of software updates, algorithms and data flows.”
“If you control it, why would you need intense monitoring to know what’s happening with it?” Mr. Sobolik questioned. “Monitoring the algorithm is not the same as controlling it. That’s the head fake the administration appears to be trying to pull here.”
Kailyn Rhone contributed reporting.