The Impending TikTok Ban was averted on Monday after officials from both countries reached a “framework” of agreement that would allow the popular social media app to continue operating in the US
Trump, speaking to reporters on Tuesday, said that the US had “reached an agreement” with China during talks in Spain to move TikTok's US unit out of its Chinese ownership and that he would finalize the deal with his Chinese counterpart Xi Jinping on Friday during major trade talks between the countries. Trump extended the deadline deadline– for the fourth time – until December 16 for ByteDance to sell its American application to a US owner.
But TikTok's algorithm, the secret sauce behind its addiction and commercial success and a major point of contention over national security issues, may remain that of its Chinese parent company.
Wang Jintao, deputy director of China's Cyberspace Administration, said at a news conference in Madrid on Monday that U.S. and Chinese officials had reached an agreement that included “algorithm licensing and other intellectual property rights.”
“According to the law, the Chinese government will review and approve relevant issues related to TikTok, such as technology exports as well as intellectual property licensing,” Wang said, adding that Washington and Beijing agreed that Bytedance would trust a partner to protect TikTok user data and content in the US.
US lawmakers have previously said TikTok's algorithm could be used by China to manipulate what content is most visible to Americans and thus influence public opinion.
Although Washington has insisted that it be under US control, Beijing argues that export laws in 2020 will give the Chinese government the right to approve any export of algorithms.
How much control China will have over the algorithm under a future agreement remains unclear, but Asian investor ByteDance said Financial Times that the new American firm TikTok will use part of the Chinese algorithm, although it will train it in the United States. “The Beijing clause is a licensing deal,” the investor said.
Wall Street JournalMeanwhile, TikTok, citing unnamed sources, said TikTok engineers will recreate content recommendation algorithms for the new app, which current US users will be encouraged to switch to.
A senior White House official told the media that “any details of TikTok's structure are pure speculation unless announced by the current administration.”
Who is Reportedly Buying TikTok?
While U.S. and Chinese officials have remained largely silent on the deal's finer details, U.S. Treasury Secretary Scott Bessent, who attended the meeting in Madrid, said it follows a pattern of “transitioning to U.S.-controlled ownership.”
Trump told reporters before leaving for Britain on Tuesday: “We have a group of very large companies that want to buy it,” but refrained from naming the companies.
But Magazine named the three companies in the consortium of investors that will run TikTok in the U.S. on Tuesday — Oracle Corp., venture capital firm Andreessen Horowitz and private equity firm Silver Lake Management LLC — citing unnamed people familiar with the matter.
The deal will reportedly reduce ByteDance's stake in US firm TikTok to less than 20% to meet the terms of the agreement by 2024. law this calls for a ban on TikTok in the US unless ByteDance sells its assets to a US firm. Magazine also said that existing non-Chinese investors in ByteDance, including Susquehanna International, KKR and General Atlantic, will be part of the non-Chinese 80% of the new firm.
Oracle, an Austin company founded by a Trump ally Larry Ellisonworked with TikTok in the USA from 2020 will host user data in the US and other countries and will reportedly continue to provide cloud services for TikTok in the US under the agreement.
New American company TikTok, Magazine will also reportedly have an American-dominated board of directors, with one member appointed by the US government.
Addressing National Security Issues
U.S. trade officials did not specify how TikTok's algorithm would be handled, but Bessent did. Reuters It said Monday that the terms of the agreement with China would retain the “Chinese characteristics” of the application, but that the US was “quite comfortable with the national security aspects of the agreement.”
Bessent said On Monday, Beijing made “aggressive requests” for a TikTok investment deal for which Washington was not willing to “sacrifice” national security.
Trade Representative Jamison Greer also raised concerns about data sharing with China. Talking to Fox Business On Tuesday, Greer said: “There is an agreement between the private parties doing the transaction, and it takes into account this particular issue with user data in the US, so it does not go back to Beijing.”
However, US lawmakers have expressed concerns about the algorithm. House Select Committee on Communist Party of China Affairs said that any deal between Beijing and Washington must comply with a law requiring TikTok to be divested of Chinese ownership. “If the algorithm were Chinese, it would not meet the requirements,” a committee spokesman said. Associated Press. “ByteDance cannot have any common algorithm.”
James Palmer Foreign policydeputy editor-in-chief, wrote On Tuesday, “China will get the best of both worlds: effectively enforcing the law while maintaining control over the content consumed by US users.”
Ultimately, the law allows the president to determine whether ByteDance has completely abandoned TikTok. An American adviser close to the deal said Financial Times: “This is the best taco deal ever” – meaning acronym for “Trump Always Out of Order”. “After all this, China is keeping the algorithm.”
