"TikTok's US Divorce Is a Trial Separation: Staff Still Use ByteDance's Lark and AI Assistant"

The deal was supposed to end the saga. In January 2026, TikTok's US operations were transferred to a new company, TikTok USDS Joint Venture LLC, majority-American-owned, to satisfy the 2024 federal law that forced ByteDance to divest the app's American business or face a ban. Three managing investors — Oracle, Silver Lake, and the Abu Dhabi-backed MGX fund — each hold 15%, affiliates of existing ByteDance investors hold roughly 30%, and ByteDance itself retains 19.9%. TikTok's chief executive told employees the arrangement would let more than 170 million Americans keep using the app. The promise was an American-controlled company, American data infrastructure, and an operational divorce from ByteDance. According to a Politico investigation published in October 2026, the divorce is, at best, a trial separation.

The reporting describes American staff working daily inside software built by ByteDance. Employees at the new company still use Lark, ByteDance's internal chat platform, to communicate with global colleagues, and the US division recently introduced Aime, a ByteDance-built AI assistant operating inside Lark — with leadership explicitly warning staff against sharing sensitive American user data with the chatbot. Some physical separation measures exist, such as requiring chaperones and banning laptops when US employees visit global office floors. But the technical reliance remains heavily integrated, and a North Dakota state office assessing the arrangement reportedly did not have access to TikTok's internal systems. The Justice Department had raised alarms about Lark long before the sale: in a 2024 filing it alleged that significant amounts of restricted American user data had been shared through Lark channels, ending up stored on servers in China and accessible to ByteDance employees there.

The legal question is precise, and it is not about the cap table. The executive order defining a "qualified divestiture" requires ending foreign-adversary control and preventing former affiliates from maintaining an operational relationship with TikTok's US operations — and it names cooperation on the recommendation algorithm and agreements to share data as examples of such a relationship. A 19.9% minority stake is compliant on paper. Daily work inside the parent's chat app, an AI assistant built by the parent, and an unresolved question over who maintains the recommendation algorithm are harder to square with the letter of that definition. TikTok's position is that the American entity now controls content policy enforcement on its own and is retraining the recommendation algorithm using American user data held in Oracle's cloud infrastructure in the United States. If that holds, the app on American phones would gradually be shaped by American data processed on American servers — which is precisely what the divestiture law demanded. The open question is who maintains the machinery underneath, and there is little public evidence of independent oversight verifying the separation.

That question is the whole story, and it is why this belongs on a site that thinks about AI rather than only about corporate law. The algorithm is the product: it decides what 170 million Americans see, in what order, and with what emphasis. The divestiture saga was never really about who owns the shares; it was about who tunes what you see and who can see the data. A corporate divorce that leaves the tools, the chat app, and possibly the algorithm maintainers in place is a legal form without technical substance — a new name on a subsidiary that still runs on its parent's infrastructure. My judgment is that formal scrutiny will follow: by March 31, 2027, the Justice Department or another federal authority will have publicly opened a formal review, investigation, or enforcement action concerning whether TikTok USDS complies with the separation requirements. The reasoning is the paper trail — the executive order's explicit language, the Justice Department's documented Lark concerns, and now a named investigation putting the operational ties on the record. The honest uncertainty is that the administration blessed this deal's framework and may not want to embarrass it, and the joint venture could quietly migrate off Lark before any authority acts. But a separation that exists on the cap table and not in the tools employees actually use is exactly the kind of gap regulators exist to close.