TikTok deal nears, but core questions linger for U.S. and China
Framework agreement could shift TikTok's U.S. operations to a U.S.-based group while keeping core technology under Chinese control via licensing; congressional and national-security considerations loom.
A potential TikTok deal could be close, with U.S. President Donald Trump and Chinese President Xi Jinping expected to discuss terms on Friday. Officials on both sides signed a framework agreement this week that people familiar with the matter described as aiming to move TikTok's U.S. operations into a U.S.-based ownership structure. If finalized, the arrangement would be a rare breakthrough in the long-running U.S.-China trade and technology dispute and would settle a question that has attracted bipartisan attention in Washington.
At the heart of the talks is TikTok's algorithm, the 'secret sauce' that powers its recommender system. Beijing has resisted surrendering the full source code, but Chinese regulators have signaled that a licensing model could be acceptable, letting ByteDance license the technology to a U.S. owner without a total transfer of ownership. The outline under discussion would place TikTok's U.S. operations in a consortium that could include Oracle, Andreessen Horowitz and Silver Lake, with ByteDance retaining ownership, branding and control over the core platform outside the United States.
Experts say a U.S.-specific version could be built on a lighter version of TikTok's software, restricting access to some advanced features tied to the algorithm and data flows. The aim would be to preserve the user experience for U.S. audiences while limiting visibility into the full toolset that makes the app profitable. Still, even a license arrangement could reveal how the technology drives engagement, moderation and ad targeting, especially if limited access were to be provided to the U.S. operator.
Any final agreement would need congressional support, and lawmakers have signaled continued concern about data access and the potential for foreign influence. The administration has repeatedly tied national security to the framework, and the talks come against a backdrop of U.S. export controls and ongoing geopolitical tensions. The notion of 'Chinese characteristics' in the governance approach has become a familiar phrase in discussions about how the two countries would structure enforcement, oversight and data handling. President Biden has urged that the framework satisfy lawmakers' demands for security and privacy.
ByteDance remains the private owner of the platform, and any deal would require the company's board to approve the arrangement. The U.S. market is a major driver of TikTok's value: about 170 million Americans use the app, and the United States represents a sizable portion of ByteDance's revenue. Industry estimates place TikTok's share of ByteDance's global revenue in the tens of billions, with TikTok accounting for roughly $30 billion of an estimated $39 billion in ByteDance's 2024 revenue, according to The Information. The platform's success in the United States, where average revenue per user remains among the highest in the world, is a key reason the talks have persisted for years.
From a Chinese policy perspective, licensing the algorithm to a U.S. owner could be a way to maintain access to the U.S. market while still controlling the intellectual property from Beijing. Analysts describe the resulting framework as potentially a 'TikTok Template' that could be used to deploy other Chinese technologies in the United States via licensing. The arrangement could also give Beijing additional leverage in broader trade negotiations, particularly if it is able to advance exports of Chinese technology under its terms, albeit not through outright ownership. Some observers say it's too early to tell how much leverage Beijing would gain, given the ongoing tensions and the possibility that other U.S. restrictions could still apply to Chinese tech.
Ultimately, the framework could represent progress in a broader and highly charged dispute, delivering a path for TikTok to operate in the United States under a U.S.-based arrangement while keeping its core technology in Chinese hands. For China, it offers a chance to steer exports of advanced technology on terms that could loosen immediate pressure in other negotiations. For the United States, it would provide a tested line of defense against an outright ban, but it would still hinge on ongoing oversight and the political will in Congress to approve, monitor and enforce the deal.
