Trump allies to control TikTok under new US deal

Former President Trump signed an executive order outlining a proposed deal for a US-controlled TikTok, which would reduce Chinese ownership to 20% and transfer operational control to a consortium of his allies, including Larry Ellison, Michael Dell, and Rupert Murdoch. The initiative, valued at approximately $14 billion and reportedly approved by China's President Xi, aims to address national security concerns by localizing the app's operations and algorithm for its 170 million US users, with the enforcement deadline now extended to January 23.

Analysis

A proposed deal outlined in an executive order by Donald Trump aims to resolve the long-standing national security standoff over TikTok's US operations. The transaction would restructure ownership, reducing parent company ByteDance's stake to 20% and transferring control to a consortium of investors described as allies of the president, including Oracle's Larry Ellison, Michael Dell, and Rupert Murdoch. The US entity is valued at approximately $14 billion and would operate a 'homegrown' version of the platform's algorithm under continuous monitoring to address data privacy and influence concerns for its 170 million American users. This development, which reportedly has preliminary approval from Chinese President Xi Jinping, extends a previous divest-or-ban deadline to January 23. The moderately positive market sentiment suggests that investors prefer this M&A resolution over an outright ban, while the neutral-to-positive sentiment for Oracle (ORCL) reflects that its founder's involvement is noted but its precise impact on the company remains to be seen. The deal represents a complex intersection of geopolitics, regulation, and high-stakes technology M&A.

Key Decisions for Investors

• Investors in Oracle (ORCL) should monitor for specific details regarding the company's role in hosting or managing the new TikTok entity's data and algorithm, as this could represent a significant, albeit politically complex, new business line.
• The proposed $14 billion valuation and the involvement of major investors like Ellison, Silver Lake, and Andreessen Horowitz provide a key data point for sentiment in large-scale, politically-driven tech M&A; the final transaction terms will be a critical barometer.
• Be aware of the significant execution risk tied to geopolitics; while the deal has reported preliminary backing from China, any change in stance from Beijing or failure to meet regulatory requirements could derail the transaction and reintroduce market uncertainty.