TikTok Signs $14 Billion Deal to Form US Joint Venture: Oracle Emerges as Big Winner

December 19, 2025 · by Fintool Agent

ORCL

After more than five years of regulatory battles, TikTok has finally signed binding agreements to form a new US joint venture that will keep the app available to 170 million American users. The deal, announced Thursday via an internal memo from CEO Shou Zi Chew, positions Oracle-1.17% as the critical infrastructure backbone for America's most influential social media platform—a role that could generate stable, high-margin revenue streams outside the company's AI-centric cloud business. 1

Oracle shares jumped 5-6% in premarket trading Friday on the news. 2

The Deal Structure: American Control, Chinese Revenue

The new entity—TikTok USDS Joint Venture LLC—will be majority-owned by American investors under terms designed to address national security concerns that first emerged during President Trump's initial 2020 attempt to ban the app. 3

The deal is expected to close on January 22, 2026, and values TikTok's US operations at approximately $14 billion, according to Vice President JD Vance. 4

Oracle's Critical Role: More Than Just Cloud Storage

Oracle's role extends far beyond a simple cloud hosting arrangement. The company will serve as the "trusted security partner" responsible for:

1. Data Protection: All sensitive US user data will be stored in Oracle's cloud environment, segregated from ByteDance's global infrastructure. 5

2. Algorithm Security: The joint venture will retrain TikTok's powerful recommendation algorithm on US user data to ensure "the content feed is free from outside manipulation." 6

3. Compliance Auditing: Oracle will audit and validate compliance with the agreed-upon National Security Terms. 7

4. Content Moderation Oversight: The US joint venture—not ByteDance—will control content moderation decisions for American users. 8

This expands significantly on Oracle's existing "Project Texas" arrangement, which routed US user data to Oracle-hosted servers but still left ultimate control with ByteDance. The new structure gives the joint venture independent authority over the app's operations. 9

The Financial Opportunity for Oracle

For Oracle investors, TikTok represents a significant long-term cloud customer outside the company's AI-focused data center buildout—which has faced recent investor concerns.

Oracle reported cloud infrastructure revenue of $2.4 billion in Q2 FY2026, up 52% year-over-year, as part of total revenues of $16.1 billion. 10 The company has been aggressively positioning itself as the cloud provider of choice for AI workloads, with Chairman Larry Ellison declaring that Oracle builds "gigawatt-scale data centers that are faster and more cost-efficient at training AI models than anyone else in the world." 11

*Values retrieved from S&P Global

TikTok's massive user base and data volumes provide Oracle with a stable, high-margin workload that doesn't depend on the volatile AI training market. The deal also validates Oracle's data security capabilities—critical for winning enterprise customers with sensitive data requirements.

What ByteDance Retains—And Why It Matters

While the deal formally divests 80.1% of TikTok's US operations, ByteDance's ongoing role has drawn scrutiny. The memo from CEO Chew indicates that "TikTok global's U.S. entities will manage global product interoperability and certain commercial activities, including e-commerce, advertising, and marketing" separately from the joint venture. 19

This means ByteDance-controlled entities will still handle TikTok's revenue-generating operations in the US, while the new joint venture controls the technology and data layer. Bloomberg previously reported that ByteDance would retain roughly 50% of the profit from TikTok's US operations. 20

Rush Doshi, who coordinated China policy at the Biden National Security Council, raised questions about the arrangement: "They say it will be trained on US data. Great, but has the algorithm been transferred, licensed, or is it still owned and controlled by Beijing—with Oracle merely providing 'monitoring?'" 21

The Political Dimension

The deal carries unmistakable political overtones. Oracle co-founder Larry Ellison is a major Trump supporter and donor. The Ellison family also controls CBS through its acquisition of Paramount Skydance and is currently pursuing a hostile takeover of Warner Bros Discovery—raising concerns about media concentration. 22

President Trump, who has over 15 million TikTok followers and launched an official White House account on the platform in August, credited TikTok with helping him win reelection. 23

Senator Elizabeth Warren criticized the arrangement: "Trump wants to hand over even more control of what you watch to his billionaire buddies. Americans deserve to know if the president struck another backdoor deal for this billionaire takeover of TikTok." 24

What to Watch

Chinese Government Approval: Beijing has not officially confirmed the deal, though state media reports suggest it will proceed. China amended its export rules in 2020 to include recommendation algorithms, making government assent necessary for any transfer. 25

Congressional Scrutiny: Representative John Moolenaar, who chairs the House Select Committee on China, has said he will host the leadership of the new TikTok entity at a hearing in 2026. 26

Oracle's AI Pivot: This deal provides Oracle with diversified revenue at a time when investors are questioning the sustainability of AI infrastructure spending. Earlier this week, Oracle shares slumped on reports that talks over a $10 billion data center deal with Blue Owl Capital had stalled. 27

Algorithm Control: The true test will be whether the new joint venture can demonstrate genuine independence from ByteDance on content recommendations—the "secret sauce" that makes TikTok uniquely addictive and influential.

Related Companies:

• Oracle Corporation-1.17%