The recent approval of a deal for TikTok’s U.S. operations by the Trump administration has ignited a debate that extends beyond financial valuation and political favoritism into the realms of national security, data governance, and corporate control. The arrangement, which values the popular social media platform’s U.S. business at approximately $14 billion, involves a consortium of U.S. investors and the Abu Dhabi-based artificial intelligence firm MGX.1 A central point of contention is the involvement of MGX, a firm backed by the Emirati state, which previously invested $2 billion in a cryptocurrency venture linked to former President Trump.1 This transaction, negotiated through an executive order, establishes a complex ownership structure and raises significant questions about the future security and operational independence of the platform used by over 170 million Americans.
From a security architecture perspective, the deal’s mechanics are critical. The new entity, TikTok U.S., will be majority-owned (approximately 80%) by a consortium including Oracle, Silver Lake, and MGX, with ByteDance’s stake reduced to less than 20%.6 The governing board will consist of seven members, six of whom will be American, with ByteDance appointing the seventh.7 A key security provision involves Oracle constructing a $20 billion data center to house U.S. user data, ostensibly placing it under domestic control.5 However, the most technically ambiguous aspect is the plan for TikTok’s core algorithm. The deal stipulates that the algorithm will be “retrained and monitored” by U.S. security partners, a process that lacks public technical detail and has been flagged by experts as a potential point of failure or ongoing foreign influence.6
Ownership Structure and Potential Conflicts
The specific breakdown of ownership introduces several layers of complexity. According to reports from CNBC, the investor group is led by Oracle and Silver Lake, with significant stakes held by MGX (15%), as well as individuals like Michael Dell and Rupert Murdoch.6, 9 The inclusion of MGX, chaired by Sheikh Tahnoon bin Zayed Al Nahyan, is particularly scrutinized due to the firm’s prior financial engagements with Trump-associated ventures. This creates a perceived conflict of interest, suggesting that foreign policy decisions may be influenced by prior private financial dealings. The structure means that while American entities hold a majority of the board seats, a substantial economic interest and a single board seat are controlled by a foreign state-backed investment vehicle, complicating the narrative of full U.S. control.
The $14 Billion Valuation and Its Implications
Vice President JD Vance confirmed the valuation of TikTok’s U.S. operations at $14 billion, a figure that financial analysts have described as surprisingly low.4 This price tag values the business at a price-to-sales ratio of about 1.4, comparable to a mature, slow-growth company like ExxonMobil rather than a high-growth technology platform.4 Ashwin Binwani of Alpha Binwani Capital called it “the most undervalued tech acquisition of the decade,” while Vey-Sern Ling from Union Bancaire Privee labeled the suggested value “daylight robbery.”4 This undervaluation primarily benefits the buying consortium, which includes several allies of the administration, leading to accusations of cronyism and a departure from free-market principles where the government appears to be picking winners based on relationships rather than competitive bidding.
National Security and the Algorithmic Black Box
The heart of the national security debate revolves around the algorithm. The content recommendation engine is TikTok’s most critical asset, and the plan to “retrain” it under U.S. supervision is fraught with technical challenges. Alan Rozenshtein, a professor at the University of Minnesota Law School, noted, “The problem is that the president has certified the deal, but he has not provided a lot of information on the algorithm.”7 The process of retraining a complex AI system is non-trivial and could alter the user experience significantly. Furthermore, the term “monitored” is vague; without transparent oversight mechanisms, it is difficult to verify that the algorithm is free from manipulation or hidden directives that could align with the interests of any party, including foreign stakeholders who retain a minority but significant interest.
Broader Pattern of Government-Imposed Financial Terms
This deal is not an isolated incident but part of a broader pattern observed during the administration. Experts have criticized the inclusion of a multibillion-dollar “fee” payable to the U.S. government as part of the transaction.2 Luigi Zingales of the University of Chicago warned that such practices shift business focus from innovation to “rent-seeking,” where companies strive to gain favorable treatment from the government rather than competing in the open market.2 Jeffrey Sonnenfeld of Yale University privately characterized the arrangement as a “shakedown scheme,” indicating a level of concern among corporate leaders who fear reprisal for public criticism.2 This approach to corporate dealings establishes a precedent where government power is leveraged for direct financial gain, creating potential vulnerabilities for businesses that may be forced to make security or operational concessions in exchange for market access.
The deal was compelled by the Protecting Americans from Foreign Adversary Controlled Applications Act (PAFACA) of 2024, which set a deadline for ByteDance to divest TikTok’s U.S. assets.8 The executive order signed on September 25, 2025, delays a potential ban until January 20, providing a 120-day window to finalize the transaction’s details.6, 8 During this period, unresolved issues such as the technical transfer of the algorithm, job security for TikTok’s U.S. employees, and potential legal challenges will need to be addressed. The international diplomatic context also remains delicate; while President Trump claimed to have received approval from Chinese President Xi Jinping, China’s foreign ministry has only issued a cautious statement urging a “fair and non-discriminatory business environment,” suggesting underlying tensions.7
In conclusion, the TikTok deal represents a significant intervention by the U.S. government into the technology sector, with outcomes that are still uncertain. The complex ownership structure, the controversially low valuation, and the unresolved technical challenges surrounding the algorithm’s control present a multifaceted problem. For security professionals, the primary concerns are the lack of transparency in the algorithm’s governance and the potential for persistent foreign influence through minority stakes and board representation. The establishment of a secure data infrastructure by Oracle is a positive step, but it does not fully address the risks associated with the software that processes the data. The coming months will be critical in determining whether this arrangement successfully mitigates the national security risks identified by U.S. lawmakers or creates a new set of governance and security challenges.
References
- D. Harwell, “TikTok deal sparks criticism over foreign involvement, price tag,” The Washington Post, Sep. 26, 2025. [Online]. Available: https://www.washingtonpost.com/technology/2025/09/26/tiktok-owners-mgx-conflict/
- B. Allyn and D. Folkenflik, “Trump’s TikTok deal payment criticized as ‘shakedown scheme’ by experts,” WFAE, Sep. 26, 2025. [Online]. Available: https://www.wfae.org/2025-09-26/trumps-tiktok-deal-payment-criticized-as-shakedown-scheme-by-experts
- A. Gardner, “TikTok follows an unusual pattern of business deals under the Trump administration,” MSNBC, Sep. 26, 2025. [Online]. Available: https://www.msnbc.com/news/news-analysis/trump-tiktok-deal-oracle-government-business-rcna233797
- “TikTok’s $14 Billion Price Tag in Trump Deal Stuns Investors,” Yahoo Finance, Sep. 26, 2025. [Online]. Available: https://finance.yahoo.com/news/prized-tiktok-business-valued-boring-044049900.html
- “Trump Approves TikTok US Sale at $14 Billion Valuation, Sparking Undervaluation Debate,” MLQ.ai, Sep. 26, 2025. [Online]. Available: https://mlq.ai/news/trump-approves-tiktok-us-sale-at-14-billion-valuation-sparking-undervaluation-debate/
- J. Vanian, “Trump approves TikTok deal through executive order, Vance says business valued at $14 billion,” CNBC, Sep. 25, 2025. [Online]. Available: https://www.cnbc.com/2025/09/25/trump-approves-tiktok-deal-through-executive-order.html
- J. Mason, D. Chmielewski, and D. Shepardson, “Trump signs order declaring TikTok sale ready and values it at $14 billion,” Reuters, Sep. 25, 2025. [Online]. Available: https://www.reuters.com/world/trump-signs-order-declaring-tiktok-sale-plan-meets-us-requirements-2025-09-25/
- “TikTok stays in America: Trump’s $14B deal with Xi gives U.S. majority control,” The Economic Times, Sep. 26, 2025. [Online]. Available: https://m.economictimes.com/…/amp_articleshow/124138066.cms
- M. Sweney, “Abu Dhabi royal family to take stake in TikTok US under Trump deal,” The Guardian, Sep. 26, 2025. [Online]. Available: https://www.theguardian.com/technology/2025/sep/26/iktok-abu-dhabi-royal-family-stake-trump-deal-mgx
