Trump’s TikTok deal faces new hurdle over billionaire stakes in ByteDance

President Joe Biden’s successor’s much‑publicized framework to create a U.S.-controlled TikTok is encountering a new potential snag tied to stakes held by billionaire investors in ByteDance, the Beijing-based parent company, according to people familiar with the negotiations.

Major investors including Susquehanna partner Jeff Yass, private-equity firm KKR and General Atlantic have ownership in ByteDance and are weighing whether to roll those shares into a proposed U.S.-based TikTok, sell them outright or use some combination of both. The choices carry possible capital‑gains tax bills, legal scrutiny and the risk of provoking China hawks on Capitol Hill who say any lingering Chinese ownership would violate the intent of recent TikTok-related legislation, the sources said.

Susquehanna is said to hold roughly a 15% position in ByteDance, General Atlantic is reported to hold a similar stake, and KKR’s holding is about 1.7%, sources briefed on the talks told the New York Post. Under the structure publicized by the White House, ByteDance itself would retain a 19.9% interest in the new company. That mix has raised questions among lawmakers and some prospective U.S. investors about whether the rollover of Chinese shares into a U.S. entity would leave too much effective influence tied to ByteDance.

A White House official familiar with the deal’s terms told reporters that the administration believes the pact complies with the law. “There is no way the law prevents U.S. investors from controlling the new company using their Chinese shares,” the official said, adding that, in the administration’s view, U.S. investors who happen to hold ByteDance stock do not constitute further Chinese ownership subject to the 19.9% limitation.

Not everyone involved in the talks shares that interpretation. Several China hawks in Congress have said they will closely review the framework, and some members have warned they would press for stricter outcomes — including a full divestment from any Chinese entity — if the new company’s ownership appears to leave substantial influence in Beijing’s hands. A prospective equity investor in the transaction told On The Money that if the rollover left the new company majority‑owned or closely tied to ByteDance, “Congress is going to go nuts.”

The choices facing the investors are practical as well as political. Selling existing ByteDance shares to purchase a stake in the U.S. vehicle could trigger significant capital‑gains liabilities, a scenario that some investors are trying to avoid by seeking so‑called rollovers, which would contribute existing shares as part of the new company’s equity. That approach, however, would create a paper trail showing a substantial part of the new company’s capital was derived directly from ByteDance holdings, potentially undermining claims the new entity is fully divorced from Chinese control.

People involved in the talks have discussed several possible workarounds. One would be for the current ByteDance shareholders to sell their holdings and then separately purchase stakes in the U.S. entity, accepting the tax consequences to avert congressional objections. Another would be a partial rollover that leaves some ByteDance ownership on the cap table in order to meet investor and regulatory demands while keeping the ByteDance stake below a negotiated threshold. A third option would be to proceed with rollovers and rely on the White House’s legal reading that U.S. investors using their Chinese shares does not violate statutory limits.

The deal framework also includes a pledge from China to allow Oracle access to TikTok’s algorithm so the U.S. firm could control and rewrite the code that curates content, a major element raised repeatedly by lawmakers concerned about data flows and influence. The White House and other advisers have said Oracle is likely to be among the largest investors in the new company.

A representative for General Atlantic declined to comment. Representatives for Susquehanna and KKR did not immediately respond to requests for comment.

The debate underscores broader tensions between urgent national-security aims, tax and securities rules, and the political optics of a high-profile technology separation from China. The proposed U.S. vehicle has been pitched at roughly $50 billion in value in public reporting, and the final ownership mix will shape whether Congress accepts the administration’s view that the new company complies with laws intended to limit foreign influence.

Lawmakers have not set a public timetable for any oversight actions but several members of Congress have signaled they will move quickly to vet the deal when formal documents or legislation are presented. The outcome will affect not only the fate of the social app but also precedent for how cross-border holdings tied to sensitive technology are treated in future national-security negotiations.