When the US President Donald Trump posted the approval of a deal that will save China’s TikTok in America, it marked the culmination of years-long-tussle between Washington and Beijing. The US wanted to wrest control away from China over one of the world’s most influential apps. TikTok’s American future was always precarious, as it was threatened with regular bans, lawsuits, and congressional hearings. But unlike India, which outrightly banned TikTok in 2020, the US tried to have its cake, and eat it too.
Both Trump and his successor, Democratic Joe Biden, issued an ultimatum: Be banned or become a minority shareholder. The idea was to possibly retain TikTok’s growing and expansive cultural and commercial footprint, and remove China from the driver’s seat. Trump and the Chinese premier, Xi Jinping seem to have reached a consensus. TikTok will continue to tick-tock in the US. But the Chinese owner will reduce its holdings to possibly 20 per cent, and play minimal role in the boardroom. The majority stakes will be picked up by the US tech giants, led by Oracle.
Trump has never hidden his disdain for TikTok. During his first term, he tried to ban it, only to be blocked by the courts. When he returned to power, one of his first moves was to sign an executive order that aimed to pull the plug on the app. There was an immediate backlash from the mass of content creators to civil liberty groups. Judges immediately pressed the pause button. Yet the political momentum was different. During Biden’s tenure, the Congress passed a bipartisan law that required TikTok to either divest its Chinese ownership or face a ban.
The new deal that Trump trumpeted on Truth Social starts a process that will project TikTok in an American avatar. The White House pegs the valuation of the app’s US operations at $14 billion. An American consortium, which will include Oracle, Michael Dell, and Rupert Murdoch will own the majority stake. China’s ByteDance will bring its holdings down to just under 20 per cent. The control of TikTok’s algorithm, data, and oversight board will shift to the US. The order gives 120 days to ByteDance to finalise the transfer.
Despite the public rhetoric about security, the reason why TikTok faced the backlash, Washington understands the political and economic stakes. We are not talking about an entertainment app. We are talking of a virtual space where 170 million Americans spend several hours a day. According to surveys, more than 40 per cent of American adults under 30 years old get their news from TikTok.
Despite the threat of a ban, the US wanted a deal, like the present one, to safeguard a critical communication channel for creators, brands, and even government agencies that use TikTok to reach out to young buyers, content consumers, and voters. Although Trump has railed against the app, the divestment route offers both a political advantage, and a way to avoid punishing the millions of users.
At a valuation of $14 billion, the figure below the app’s global potential but high enough to justify the entry of new investors, who will bet on its advertising engine. The US gets corporate control. TikTok’s American entity will be governed by a board dominated by US directors, its data will be held in American facilities and, most crucially, its algorithm will be retrained under the US oversight.
The algorithm is TikTok’s pulsing heart, the code that keeps users hooked and creators relevant. By ensuring that the recommendations are managed, run, and audited in the US, the regulators believe that they have closed the back door that allowed Beijing to at least theoretically influence what Americans saw. It is a remarkable precedent in corporate history. Washington will get the option to decide where data is stored, and who controls the logic of the feed.
However, the arrangement leaves room for uncertainty. China’s export-control rules give it a veto over how much algorithmic know-how can legally be transferred to another country. Publicly, the Chinese officials dub it a “win-win,” but they have stopped short of issuing a formal approval. Their message is carefully calibrated. ByteDance avoids a wipe-out in the US, and China reserves the right to scrutinise the licensing of the core intellectual property.
Another interesting facet of this deal is that the new American owners will be new custodians. Oracle’s Larry Ellison and his company are not merely technical partners. They will be the gatekeepers of the architecture, and entrusted with data custody, algorithm enforcement, and possibly the largest stake. This places Oracle at the nerve center of a national security-linked asset.
Since Trump’s second term, Ellison’s strategic elevation is evident. After the cursory details of the new deal became public, the Oracle stock surged by three per cent. Earlier, it gained more than 40 per cent in a day when it showcased its rise as a major AI cloud provider. Ellison’s increasing prominence in policy debates, alignment with MAGA interests, and positioning as America’s “trusted custodian” for Chinese apps have arguably provided him with a powerful image.
Control over TikTok’s data infrastructure and algorithm opens lucrative opportunities in cloud management, AI auditing, and potential “trusted tech stack” contracts with the government agencies. Even if Oracle did not ask for the favours, the political alignment implies that it is less likely to be scrutinised or sidelined. The company’s role may well be a payoff for long-standing loyalty, and not just a coincidence of technical credentials.
From Beijing’s perspective, the ban alternative was the worst-case scenario. It would have cut ByteDance off from its largest overseas market, and be seen as a huge political victory for Washington. For example, New Delhi gained huge brownie points when it banned TikTok. By retaining a minority stake in the American operations, China can reap some economic benefits, and use it as a leverage in the future disputes over intellectual property. The “win-win” framing is less about genuine partnership, and more about damage control.
More importantly, there may be a quid pro quo angle to the TikTok deal. China may have agreed to a minority stake, but may demand relaxations on the trade and tariff fronts during the future bilateral talks between the two nations. In the past, Beijing has been known to sacrifice businesses and businesspersons at the altar of national and economic security. Some companies and groups were wiped out, merely because it helped the political masters.
Similarly, Beijing has possibly realised that it is better to keep a window or a ventilator open, despite the door being shut. For instance, India banned TikTok, and dozens of other Chinese apps, in 2020. Overnight, it wiped out an entire creator economy. For India, it removed security concerns in a single stroke. Washington wants a more surgical solution, which keeps the platform alive, and limits Beijing’s influence. So, the hybrid model works for it. After the Indian experience, China too is more amenable to it.
