Congress Uncertain About TikTok Deal’s Legal Compliance

TikTok has finally struck a deal to comply with regulations that could have led to its ban last year, but lawmakers still seem unclear about the implications. The company revealed that its U.S. operations are now part of the TikTok USDS Joint Venture LLC, where ByteDance retains only a 19.9 percent stake. The majority ownership belongs to Oracle, along with investment firms Silver Lake and MGX, and smaller investors like Michael Dell’s family firm. Oracle will handle U.S. data storage, and the joint venture will manage the content recommendation algorithm using U.S. user data, as well as oversee trust and safety policies and content moderation.

However, the announcement left many questions unanswered, particularly regarding whether the licensing agreement for the algorithm can be structured to avoid any prohibited ties with ByteDance. Even supporters of the legislation are seeking clarity. House Select Committee on China Chair John Moolenaar (R-MI) expressed concerns about whether the deal ensures that China has no influence over the algorithm and if American data is secure.

Select Committee Ranking Member Ro Khanna (D-CA), who opposed the original bill and proposed its repeal, noted that the deal is creating uncertainty for many creators. He committed to working with those who rely on the app to find a path forward that prioritizes data security while supporting the growing creator economy.

Sen. Ed Markey (D-MA), who backed the foreign aid package that included the divest-or-ban bill, initially sought to extend the deadline for a resolution. Despite the original bill’s timelines being overlooked by former President Trump, Markey later suggested legally rescinding the ban. Now that a deal is in place, he remarked that it raises more questions than it answers.

Trump has been a key player in the negotiations, discussing the TikTok deal with China’s President Xi Jinping and even joking with Oracle chairman Larry Ellison about negotiating publicly. Markey criticized the White House for not providing sufficient details about the agreement, particularly regarding the algorithm’s independence from Chinese influence. He emphasized the need for transparency and congressional oversight to ensure national security while keeping TikTok operational.

Many Democrats are frustrated that Trump’s allies, like Ellison, may benefit from this arrangement. Energy and Commerce Committee Ranking Member Frank Pallone (D-NJ), who supported the initial bill, voiced concerns on social media, stating that the limited information provided fails to address compliance with the law or the national security risks posed by Beijing’s ongoing control of the platform.