U.S. and China Reach Framework to Keep TikTok Operating in U.S.; Algorithm Licensing Remains Key Issue

U.S. and Chinese officials announced a framework deal that would allow TikTok to continue operating in the United States while moving control of the American business to U.S. ownership, but the Chinese-origin algorithm that powers the app’s content recommendations may remain subject to licensing by ByteDance.

The announcement followed talks in Madrid where Chinese officials said the agreement included provisions to license the algorithm and other intellectual property rights, a point that has long been at the center of U.S. national security and foreign-influence concerns. President Donald Trump said the two sides had "reached a deal" during meetings in Spain and that he planned to finalize terms with Chinese President Xi Jinping during upcoming negotiations. Trump extended the deadline for ByteDance to divest its U.S. app to a U.S. owner to Dec. 16, the fourth extension of the deadline imposed by U.S. law.

Chinese deputy Cyberspace Administration official Wang Jingtao said at a Madrid press conference that Washington and Beijing agreed ByteDance would "entrust a partner with TikTok U.S.’s user data and content security," and that the Chinese government would examine and approve technology exports and intellectual property licensing under Chinese law. U.S. officials, however, have been careful to withhold full details. A senior White House official warned against treating unannounced particulars as definitive.

Reports from multiple news outlets named a prospective investor consortium that would operate TikTok in the United States. The Wall Street Journal cited unnamed sources identifying Oracle Corp., venture capital firm Andreessen Horowitz and private equity firm Silver Lake Management as participants in the investor group. The Journal reported the transaction would reduce ByteDance’s stake in the U.S. company to under 20% to meet a 2024 U.S. law that requires divestiture or a ban on the app.

U.S. Treasury Secretary Scott Bessent, who attended the Madrid meeting, said the framework contemplates a switch to U.S.-controlled ownership while preserving some of the app’s "Chinese characteristics." Bessent told Reuters the U.S. is "quite comfortable with the national security aspects of the agreement," saying Beijing had made "aggressive asks" but Washington would not sacrifice security. Trade Representative Jamieson Greer said the private transaction addresses the specific issue of U.S. user data and asserted that it would not be returned to Beijing.

Still, the role and control of TikTok’s recommendation algorithm — the mechanism that tailors videos to individual users and drives the platform’s engagement and commercial value — remains contested. U.S. lawmakers have repeatedly warned the algorithm could be used to shape what content is most visible to Americans. The House Select Committee on the Chinese Communist Party said any deal must comply with the law requiring divestiture and warned against a structure that would allow a shared algorithm with ByteDance.

Media accounts differ on how the algorithm issue could be resolved. The Financial Times reported an Asia-based investor who said the new American firm would use part of the Chinese algorithm but train it in the U.S. The Wall Street Journal reported that TikTok engineers would recreate content-recommendation algorithms for a new app that current U.S. users would be asked to migrate to. A U.S. adviser quoted by the Financial Times described the outcome as allowing China to keep influence over key technology while meeting the letter of U.S. law.

Oracle, which has provided cloud-hosting services for TikTok’s U.S. user data since 2020, is reported to be in discussions to continue providing cloud services under the new arrangement. The Journal also reported that existing non-Chinese ByteDance investors, including Susquehanna International, KKR and General Atlantic, would be part of the U.S.-dominated ownership structure and that the restructured company would have an American-majority board with one member designated by the U.S. government.

The 2024 law gives the president authority to determine whether ByteDance has fully divested. Administration officials said they would continue to review technical and national security details before ratifying any final agreement. Until those details are publicly disclosed, differing accounts and legal interpretations are likely to continue shaping congressional scrutiny and media coverage of the proposed transaction.