On January 23, ByteDance, finalized a deal to create a majority American-owned joint venture, restructuring its US operations to avoid a nationwide ban on TikTok.
The recent deal primarily prevents a nationwide ban and creates a structural firewall between TikTok’s US business and its global parent.
Under the new deal, TikTok’s algorithms will be retained exclusively on US user data to comply with American regulations.
However, over the last six months, Beijing has hesitated to approve any agreement that fails to align with China’s national interests.
Chinese leader Xi Jinping likely has his own reasons for appearing to give Trump a win. The app ban was scheduled for January 2025 should ByteDance fail to divest its American operations; President Trump has repeatedly postponed its enforcement.
At that time lawmakers feared the Chinese government might pressure ByteDance into surrendering US user data.
Although the current deal made between Washington and Beijing remains tenuous, it offers a promising framework for future negotiations.
White the two sides having only agreed to a trade truce, Beijing is eager to move past President Trump’s threats of high tariffs.
However, the Republican chairman of the House Select Committee on the Chinese Communist Party,Rep, told the BBC the specific details of the agreement will still require close analysis.
US prioritizes strategic TikTok deal over national ban
Trump was already interested in a TikTok deal after recognizing that young voters on the app helped him to win the 2024 election, despite originally supporting a ban during his first term.
The finalization of the deal represents a major victory for the administration. With one in seven people globally using the platform, TikTok has become a viral marketplace for commerce from the US to Philippines.
TikTok USDS maintains that it will safeguard the US content ecosystem by retaining full authority over moderation and safety policies.
The statement further implies that the USDS Joint Venture ensures that Americans can express their creativity, discover new habits and interests, and build thriving communities and businesses on an international scale.
What does the TikTok deal mean for the US-China relationship?
The deal was largely anticipated, yet it barely scratches the surface of the complex relationship between the world’s two biggest economies. Both Washington and Beijing are likely to frame the agreements as a victory: for China it validates the dominance of its technology; for Donald Trump it serves as high-profile evidence of his negotiating prowess.
Additionally, TikTok has confirmed the legal formation of TikTok USDS Joint Venture LLC, a new American entity designed to operate the platform under strict US regulatory oversight.
Who owns TikTok in the US now?
TikTok has confirmed that the new joint venture, TikTok USDS Joint Venture LLC, will operate as an independent entity governed by a seven-member American board of directors.
Adam Presser, formerly an executive at Warner Media has been appointed as the venture’s CEO.
The operation is backed by three managing investors-Oracle, Silver Lake and Abu Dhabi-based MGX-who hold a 15% stake in the new company.
- Oracle-the cloud computing giant chaired by Larry Ellison, who’s a Republican megadonor and longtime Trump ally
- Silver Lake-a US tech investment firm that says it holds approximately $116bn in assets.
- MGX-an Emirati investor in AI and technology
What we need to know about TikTok’s ‘secret sauce’ algorithm
The arising question is at the crux of the conflict over TikTok’s US operations. Its algorithm is the “secret sauce” that has driven the app’s massive popularity.
Under the terms of the deal, the algorithm will be retrained on US user data which will be secured to meet American regulations. TikTok has confirmed that the algorithm will be housed within Oracle’s US cloud environment. The consequences of this transition will soon be felt by the millions of American TikTok users.
Experts suggest this shift could produce a lighter application that operates in isolation from the global version. As a result, the retained algorithm may not recommend content as effectively as the previous unified platform.
Nonetheless, this agreement concludes a volatile multi-year struggle punctuated by the brief blackout in early 2025 and a series of executive extensions that fully culminated in meeting the administration’s divestment criteria.
