US President Donald Trump signed an executive order on Thursday that paves the way for the popular short video app’s ownership to be transferred from its Chinese parent company, ByteDance, to a newly formed US entity. The estimated value of this new undertaking is approximately $14 billion, according to Vice President JD Vance, a figure that falls notably below analysts’ earlier valuations.
In response to escalating national security concerns, the President has delayed enforcement of a 2024 law that mandates the sale of TikTok’s US operations—aiming instead for a smooth transition that can address the necessary legal framework and leverage US-based investment. Trump’s executive order stipulates that the new joint venture would be required to retrain and manage TikTok’s crucial recommendation algorithm, ensuring that it operates securely under the guidance of American security partners.
Vice President Vance elaborated on the decision during an Oval Office briefing, highlighting the administration’s commitment to safeguarding American user data. “There was some resistance on the Chinese side,” Vance acknowledged, “but fundamentally, we want to protect Americans’ data privacy as required by law.” The necessity for compliance with this legal directive underscores the government’s vigilance regarding concerns around data sovereignty and national security amidst rising tensions with China.
Interestingly, reports of tacit approval from China’s President Xi Jinping were mentioned by Trump during the announcement: “I spoke with President Xi… he said go ahead with it.” This revelation appeared to sit uneasily with the broader discussions within China’s foreign ministry, which maintained that the Chinese government respects company autonomy in business negotiations while advocating for a fair and non-discriminatory environment for Chinese investors operating in the US.
As discussions over TikTok’s operational structure proceed, the details surrounding control of the algorithm remain contentious. Legal experts have noted existing ambiguities regarding whether ByteDance would retain influence over the algorithm after the sale. “The problem is that the president has certified the deal, but he has not provided a lot of information on the algorithm,” commented Alan Rozenshtein, a law professor at the University of Minnesota.
Moreover, conflicting narratives emerged from Chinese media suggesting that ByteDance may still maintain a significant operational role through the establishment of a new US subsidiary tasked with handling e-commerce and promotional ventures related to TikTok. These reports were subsequently removed from view, indicating the sensitive nature of the negotiations.
On the investment front, a complex ownership structure is taking shape, with Oracle and private-equity firm Silver Lake reportedly securing a 50% stake in TikTok US. Meanwhile, existing investors in ByteDance, which include notable firms like Susquehanna International Group and General Atlantic, are expected to retain around 30% equity. Signs of high investor interest could lead to further adjustments in this distribution as the deal solidifies.
As lawmakers in the Republican-controlled House of Representatives begin to scrutinise the transaction more closely, calls for transparency arise regarding the deal’s how it will safeguard American users from foreign influence. Representatives Brett Guthrie and Gus Bilirakis stressed the importance of ensuring that the arrangement constitutes a definitive separation from Chinese ownership.
In the backdrop of these developments, TikTok, which boasts an impressive user base of 170 million in the US, has proven itself as a key tool in Trump’s communication strategy, with the former President crediting the platform for contributing to his reelection success. Notably, Trump himself has amassed a following of 15 million on his personal TikTok account, as the White House also recently launched an official account on the platform.