TikTok narrowly averted a nationwide ban by securing a pivotal deal that restructures its ownership framework in the United States. This arrangement, crafted to comply with upcoming 2024 regulations mandating divestitures or outright bans for certain foreign technologies, has prompted scrutiny regarding the scope of control transferred to U.S. investors.
Under the terms finalized by the Chinese parent company ByteDance, a new operational entity titled TikTok USDS Joint Venture LLC has been formed. The joint venture will be predominantly American-owned, with U.S. and global investors collectively holding 80.1% of the entity's shares. ByteDance retains a minority 19.9% stake.
Among the principal American investors, Oracle Corporation (NYSE: ORCL), private equity firm Silver Lake, and Abu Dhabi’s MGX each possess a 15% stake and will function as managing investors. Central to the agreement, TikTok declared that all user data and its proprietary recommendation algorithm will be hosted on Oracle’s U.S.-based cloud infrastructure. The company emphasized enhanced privacy and cybersecurity strategies, including algorithm retraining and testing exclusively using U.S. user information.
However, this resolution has ignited criticism from Senator Bernie Sanders (I-Vt.). In a public social media message on platform X, Sanders voiced his concerns about the concentration of influence that the agreement consolidates under a single billionaire. He explicitly pointed out Larry Ellison, co-founder of Oracle and a billionaire with reported close ties to former President Donald Trump, asserting that Ellison's control over the TikTok algorithm represents a manifestation of oligarchic power.
Senator Sanders further highlighted Ellison-linked entities' involvement in major media outlets, suggesting a problematic consolidation of media and informational influence. This critique places focus not only on TikTok’s new structure but also on the broader implications of media control in the current U.S. landscape.
Expansion of Ellison Family's Media Influence
Adding context to Sanders’ critique is the expanding media footprint controlled by entities tied to Larry Ellison. Paramount Skydance (NASDAQ: PSKY), backed by Ellison, now commands an extensive portfolio of media properties, including CBS, MTV, Nickelodeon, BET, CMT, Paramount+, and Pluto TV. The consolidation follows a merger that has intensified scrutiny of the company's growing media dominance.
Moreover, Bari Weiss, founder of The Free Press, was appointed last year as editor in chief of CBS News, reporting directly to David Ellison, CEO of Skydance and son of Larry Ellison. This leadership alignment has emphasized the Ellison family's increasingly centralized influence over prominent news outlets.
Paramount Skydance's prominence in the media sector is underscored by its ongoing high-stakes opposition against Netflix Inc. (NASDAQ: NFLX) concerning Warner Bros. Discovery (NASDAQ: WBD). This contest is poised to reshape the evolving U.S. media environment significantly.
Financial Performance and Market Outlook
From an investment perspective, Oracle stock demonstrates mixed signals. According to Benzinga's Edge Stock Rankings, Oracle scores poorly in momentum and value categories, with trends indicating a negative price movement in the short, medium, and long term. While Oracle’s involvement in securing TikTok’s U.S. data infrastructure is strategic, the stock’s performance reflects broader market challenges.
Conclusion
The arrangement enabling TikTok to remain operational within the United States has introduced complex questions about media ownership and data control. While the restructuring addresses regulatory compliance and privacy concerns, it simultaneously concentrates significant algorithmic and data governance in the hands of U.S. investors like Larry Ellison, sparking political and public discourse about media oligarchies.