What we do and don’t know about the US TikTok deal with China
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Under the spin-off arrangement being discussed, TikTok will be majority-owned and controlled by Americans, according to White House Press Secretary Karoline Leavitt.
PHOTO: REUTERS
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After more than a year of negotiations, the US and China are nearing an agreement to hive off the US operations of social media platform TikTok to a consortium that includes software giant Oracle.
If the deal is finalised, it would resolve a persistent issue in Beijing-Washington relations that has become entangled in broader talks over trade.
Under a law signed in 2024 by then-president Joe Biden – the Protecting Americans from Foreign Adversary Controlled Applications Act – the app’s owner, Beijing-based ByteDance, was ordered to either sell TikTok US or discontinue the service.
The initial deadline was in January, but President Donald Trump extended this multiple times after reentering office, most recently pushing it to Dec 16.
Under the spin-off arrangement being discussed, TikTok will be majority-owned and controlled by Americans, according to White House Press Secretary Karoline Leavitt.
Many of the finer details of the agreement have yet to be made public.
The final outcome will help shape the fate of ByteDance – a US$400 billion (S$513.5 billion) startup that is China’s most valuable private company, and whose video platform TikTok was used by 170 million Americans before being deemed a national security threat.
How the framework evolves will likely have ramifications for the broader US social media landscape, too, where rivals including Meta Platforms and Alphabet are jostling for market share.
Who will own TikTok in the US?
Mr Trump hailed progress towards completing a deal following a Sept 19 phone call
China’s foreign ministry stopped short of saying that Beijing had given its final blessing, urging for fair treatment of Chinese interests.
Under the terms being discussed, TikTok’s US operations would be acquired by a consortium that includes Oracle, venture capital firm Andreessen Horowitz and private equity player Silver Lake Management.
Oracle currently provides cloud services for TikTok and hosts user data in the US and other countries. Should this deal go through, Oracle will act as TikTok’s security provider and monitor the app for safety, working with the US government, according to a senior White House official.
Mr Trump suggested in an interview with Fox News that Fox Chairman Lachlan Murdoch and his father Rupert Murdoch are also involved in the takeover. He mentioned Mr Larry Ellison, the chairman of Oracle, and Mr Michael Dell, chairman of Dell, as well.
The proposed plan is for Americans to hold six of seven seats
Few details about ByteDance’s role under the new framework have been offered so far, but to satisfy the 2024 US law, the stake held by the company in TikTok would need to fall below 20 per cent.
There are also no specifics yet about the price tag attached to ByteDance’s most lucrative business outside of China. TikTok has been valued at between US$35 billion and US$40 billion, though tech valuations have climbed rapidly with the advent of the artificial intelligence boom.
How will this deal affect TikTok users in the US?
TikTok will continue operating in the US in its current form until an accord is finalised, at which point it will be discontinued in the country and the app’s users will migrate to a new platform, according to Bloomberg reporting.
The details of this new platform that TikTok’s millions of mostly young American users will have to converge on are unclear.
What will happen to TikTok’s algorithm?
TikTok’s breakout success came off the back of its algorithm, which feeds content to users based on their recent activity and interests.
Under the proposed deal, Oracle will recreate and provide security for a new US version of the algorithm, a White House official said. The owners of the US-based TikTok will lease a copy of the algorithm from ByteDance that Oracle will then retrain “from the ground up”, according to the official.
Data from US users will be stored in a secure cloud managed by Oracle, and there will be controls to keep out foreign adversaries, including China, the official said. ByteDance won’t have access to information on TikTok’s US subscribers, nor any control over the algorithm in the US.
What’s the fuss over TikTok’s US operations anyway?
By some reckonings, TikTok’s US branch ranks among America’s most popular social media platforms based on average daily app usage, rivaling the likes of Alphabet’s YouTube and Meta’s Instagram. That level of engagement makes it a lucrative business with advertisers eager to capture the attention of its vast user base.
In 2024, TikTok drove a worldwide revenue expansion for ByteDance that helped offset an economic downturn in China, pushing sales from the parent company’s overseas operations to US$39 billion for the year, Bloomberg reported.
More importantly, as Trump himself has repeatedly emphasised, is TikTok’s influence with a younger, Gen-Z audience. The longer-term potential for newer offshoots such as TikTok Shop to challenge Amazon.com and Walmart in e-commerce is also appealing to investors.
TikTok is still arguably among the most successful overseas forays by China’s tech sector, which in past years have been circumscribed by geopolitical tensions.
Why did the US give ByteDance this ultimatum?
US lawmakers have long been concerned that TikTok could be used to spy on American citizens. This stems from the fact that China requires its companies, upon request, to share any national security-related data with its government.
US officials also worry that China’s government could abuse the data of US TikTok users – for example, by collecting dossiers of personal information for blackmailing purposes or exploiting content preferences to manipulate the type of videos users see to spread propaganda.
TikTok sought to counter these concerns, spending more than US$2 billion to migrate the storage of US users’ data to US-based cloud servers operated by Oracle in 2022. However, those efforts failed to assuage lawmakers. BLOOMBERG
