Summary
- Trump
signed an order to approve the TikTok U.S. sale deal. - The
deal separates TikTok U.S. operations from Chinese owner ByteDance. - U.S.
investors Oracle, Silver Lake lead new TikTok entity.
Separating TikTok from its Chinese owner ByteDance, Trump
claimed that he and Chinese President Xi Jinping had reached an arrangement to
permit the social media platform to continue functioning in the US. According
to Trump, the agreement complies with a statute that, had the app not been
divested and transferred to a US owner, would have required its shutdown for
American users.
The idea calls for US investors to acquire a licensed copy
of TikTok’s potent recommendation algorithm and take over the majority of the
company’s activities. It is anticipated that ByteDance and Chinese investors
will own fewer than 20% of the US spinoff company, while American corporations
will own roughly 80%.
The group of American TikTok investors is led by the US
software giant Oracle, which will oversee TikTok’s US operations, provide cloud
service for user data storage and get a license to take control of the app’s
algorithm. White House officials have said ByteDance and Chinese officials will
not have access to US user data.
Along with Oracle and its cofounder Larry Ellison, other
investors include
the private equity firm Silver Lake, media mogul Rupert Murdoch and his son
Lachlan, and the CEO of Dell computers Michael Dell.
Trump said he spoke with Xi over the phone on Friday.
“The
call was a very good one, we will be speaking again by phone, appreciate the
TikTok approval, and both look forward to meeting at APEC!”
the president wrote
on his social network, Truth Social.
The tentative agreement gives numerous US companies a
significant boost in the social media market while also putting an end to
months of legal uncertainty for one of the most popular apps in the US.
Trump has attributed his victory in the 2024 presidential
election to TikTok, which is utilized by around 180 million people nationwide.
Following its acquisition of a 10% interest in chipmaker Intel earlier this
month and its calls for Apple and Nvidia to commit hundreds of billions of
dollars in domestic investments, the move is also another attempt by the Trump
administration to influence the tech sector.
The Wall Street Journal reports that the US government is
anticipating a multibillion-dollar fee from the group of investors for the
complex TikTok talks with China.
“The United States is getting a tremendous fee-plus—I call
it a fee-plus—for just making the deal,”
Trump said of the unprecedented
transaction, while speaking at a press conference in England last week.
“And I
don’t want to throw that out the window.”
Legislators from both parties have already criticized TikTok
for data privacy issues and claims that China could use the app to propagate
propaganda or threaten American democracy. Congress overwhelmingly voted last
year to require ByteDance to find a US buyer or risk being banned in the US,
despite TikTok’s repeated denials of those allegations.
In January, the ban was unanimously maintained by the
Supreme Court. Trump signed an executive order delaying the ban’s
implementation on his first day in office, and he has since done so several
times.
How will this deal affect TikTok moderation and algorithm
control?
Oracle will operate, retrain, and secure a leased copy of
TikTok’s recommendation algorithm for the U.S. version, ensuring it is free
from improper manipulation or surveillance.
U.S. investors will control six of seven board seats
governing TikTok’s U.S. operations, granting Americans majority oversight.
Algorithm control means U.S. entities will decide how
content is recommended, which affects moderation decisions and what users see
in their feeds. However, the core algorithm remains intellectual property of
ByteDance in China but is leased to the U.S. entity and retrained “from the
ground up.”
