A potential ban on TikTok has been averted, as officials from both nations have established a “framework” agreement, enabling the popular social media application to continue its operations in the U.S.
President Trump announced to reporters on Tuesday that the U.S. had “reached a deal” with China during discussions held in Spain. This agreement aims to separate TikTok’s U.S. operations from its Chinese ownership. He stated he would finalize the deal with Chinese President Xi Jinping on Friday, coinciding with major trade negotiations. Trump also extended the deadline—for a fourth time—until December 16, allowing ByteDance to divest its U.S. application to an American owner.
However, the algorithm driving TikTok’s addictive nature and commercial triumph, which is also a primary focus of national security worries, might continue to belong to its Chinese parent corporation.
During a press conference in Madrid on Monday, Wang Jingtao, deputy director of the Cyberspace Administration of China, stated that officials from both the U.S. and China had come to an understanding which encompassed “licensing the algorithm and other intellectual property rights.”
Wang further noted that “the Chinese government will legally review and authorize pertinent issues concerning TikTok, including technology exports and intellectual property licensing.” He also mentioned that Washington and Beijing concurred that ByteDance would delegate TikTok U.S.’s user data and content security to a designated partner.
Previously, U.S. legislators asserted that China could potentially utilize TikTok’s algorithm to control the visibility of content for Americans, thereby influencing public sentiment.
Despite Washington’s efforts to place it under U.S. jurisdiction, Beijing maintains that its 2020 export laws grant the Chinese government approval authority over any algorithmic exports.
The extent of China’s ongoing control over the algorithm within the forthcoming arrangement is still uncertain. However, an Asia-based investor in ByteDance informed a media outlet that the new U.S. TikTok entity would incorporate a portion of the Chinese algorithm, albeit training it within the U.S. The investor emphasized, “Beijing’s ultimate requirement is a licensing agreement.”
Meanwhile, another report, citing anonymous sources, indicated that TikTok’s engineers are expected to reconstruct the content-recommendation algorithms for a new application, to which current U.S. users will be requested to migrate.
A high-ranking White House official informed the press that “any specifics regarding the TikTok framework remain speculative until officially declared by this Administration.”
Who is Reportedly Acquiring TikTok?
Although officials from both the U.S. and China have remained mostly silent on the intricate details of the deal, U.S. Treasury Secretary Scott Bessent, present at the Madrid meeting, stated that it aligns with a framework designed “for a transition to U.S.-controlled ownership.”
Before his departure for the U.K. on Tuesday, President Trump informed reporters, “We have a group of very big companies that want to buy it,” but he refrained from disclosing their names.
However, a media outlet reported on Tuesday, citing anonymous sources familiar with the situation, that three companies—Oracle Corp., venture capital firm Andreessen Horowitz, and private equity firm Silver Lake Management LLC—constitute the investor consortium set to operate TikTok in the U.S.
The agreement is expected to decrease ByteDance’s share in the U.S. TikTok entity to below 20%, fulfilling a 2024 legislative mandate that requires TikTok’s prohibition in the U.S. unless ByteDance divests its assets to an American company. The Journal additionally reported that current non-Chinese investors in ByteDance, such as Susquehanna International, KKR, and General Atlantic, would comprise the remaining 80% of the new firm.
Oracle, an Austin-based firm established by a Trump associate, has previously collaborated with TikTok in the U.S. to host user data both domestically and internationally. Under the new agreement, Oracle is reportedly set to persist in offering cloud services for TikTok in the U.S.
Furthermore, the new U.S. TikTok company, as reported by a news source, will feature a board predominantly composed of Americans, with one member appointed by the U.S. government.
Addressing National Security Apprehensions
While U.S. trade officials did not elaborate on the specific handling of TikTok’s algorithm, Bessent informed a news outlet on Monday that the agreement’s terms with China would maintain the app’s “Chinese characteristics.” He added that the U.S. feels “quite comfortable with the national security aspects of the agreement.”
Bessent stated on Monday that Beijing had presented “aggressive demands” regarding the TikTok investment deal, which Washington was unwilling to “sacrifice” national security to accommodate.
Trade Representative Jamieson Greer also addressed worries regarding data sharing with China. In a statement to a media outlet on Tuesday, Greer remarked, “An agreement exists between the private entities involved in this transaction, and it specifically addresses the matter of U.S. user data, ensuring it will not return to Beijing.”
Nevertheless, U.S. legislators voiced apprehension regarding the algorithm. The House Select Committee on the Chinese Communist Party warned that any agreement between Beijing and Washington must adhere to the statute mandating TikTok’s divestment from its Chinese ownership. A committee spokesperson informed a news agency, “It would not comply if the algorithm remains Chinese. There cannot be any shared algorithm with ByteDance.”
James Palmer, deputy editor for Foreign Policy, commented on Tuesday that “China would benefit from both scenarios: ostensibly adhering to the law while retaining authority over the content consumed by U.S. users.”
Ultimately, the legislation empowers the President to ascertain if ByteDance has completely divested from TikTok. A U.S. adviser with close ties to the deal remarked to the Financial Times: “It’s the ultimate Taco trade”—referencing an unnamed concept—adding, “After all this, China retains the algorithm.”
