DOJ Clears TikTok for Federal Devices After 80.1% US Ownership Restructuring

The DOJ's legal opinion and the Supreme Court's affirmation of the 2024 law signal a robust framework for addressing data security threats from foreign-owned tech platforms. For legal professionals, this case study illustrates the intersection of national security, trade law, and corporate restructuring.

In a landmark resolution to a protracted national security dispute, the U.S. Department of Justice announced on July 17, 2026, that TikTok is no longer prohibited on federal government devices, following a fundamental restructuring of its U.S. operations. The DOJ’s Office of Legal Counsel concluded that the new American-majority joint venture, TikTok U.S. Data Security (TikTok USDS), effectively mitigates the espionage risks that had previously prompted a ban in 2022. This decision marks the culmination of a multi-year legal and legislative campaign to force ByteDance, TikTok’s Chinese parent company, to divest its American operations or face a nationwide ban.

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The restructuring, finalized in January 2026, created TikTok USDS as an independent Delaware-incorporated entity, with American investors owning 80.1% of the venture and ByteDance retaining a minority 19.9% stake.

The roots of this saga trace back to 2022, when the U.S. government, alarmed by the potential for the Chinese government to access TikTok user data under national intelligence laws, barred the app from federal-issued devices. The prohibition was part of a broader crackdown on Chinese technology firms viewed as instruments of state surveillance. In 2024, Congress escalated the pressure by passing the Protecting Americans from Foreign Adversary Controlled Applications Act, signed into law by President Joe Biden, which mandated that ByteDance sell its U.S. operations. The law was promptly challenged in court, but in January 2025, the Supreme Court upheld its constitutionality, affirming Congress’s authority to safeguard national security through forced divestiture.

The restructuring, finalized in January 2026, created TikTok USDS as an independent Delaware-incorporated entity, with American investors owning 80.1% of the venture and ByteDance retaining a minority 19.9% stake. The DOJ’s analysis emphasized three critical safeguards: first, the joint venture operates autonomously from ByteDance, with its own board controlled by U.S. citizens; second, the content recommendation algorithm was overhauled to run on U.S.-based servers and under domestic oversight; third, a new cybersecurity program was implemented specifically to protect federal government data. The Office of Legal Counsel asserted that the American-controlled version of TikTok “poses no such risk” as the earlier Chinese-linked app.

The implications of this decision extend far beyond TikTok. For the first time, the U.S. government has provided a clear template for resolving data security concerns through a structured divestiture rather than an outright ban. This could serve as a model for other foreign-owned apps that collect sensitive user data, such as WeChat or other platforms facing scrutiny. The opinion also validates the 2024 law as an effective instrument, potentially emboldening lawmakers to pursue similar actions against other adversarial technologies.

However, the resolution is not without lingering doubts. The 19.9% stake retained by ByteDance, while lacking operational control, still provides a financial interest. Critics may argue that economic ties could lead to indirect influence, especially given ByteDance’s continued role in developing the core technology shared globally. Moreover, the DOJ’s opinion is based on representations by TikTok USDS about its independence and security upgrades, rather than a public, independent audit. The fact that individual federal agencies retain discretion to allow or ban the app on their own devices creates a fragmented policy landscape; some may continue to prohibit it based on their own risk assessments.