After four extensions of the statutory deadline to ban TikTok or force its Chinese owners to divest, US President Donald Trump on Thursday last week signed an executive order transferring the app to US ownership. The announcement follows years of diplomatic sparring, bureaucratic maneuvering, repeated efforts by federal and state governments to curtail the platform, and even a ruling from the US Supreme Court. Has the fate of the US’ most viral social media app finally been decided?
Those expecting closure would be disappointed. This latest “framework consensus” still leaves China with significant leverage over TikTok. What looks like a victory for the US might well be Chinese President Xi Jinping’s (習近平) biggest strategic triumph yet.
On the surface, the agreement does look like a grand bargain for the US. Oracle and a consortium of US investors would control 80 percent of a newly created US entity that would run TikTok’s operations in the US. All US user data would remain on Oracle’s servers in Texas, and the new company would license TikTok’s prized recommendation algorithms and retrain them on US data. Six of the entity’s seven board seats would be held by Americans.
Illustration: Mountain People
In other words, Americans’ data and TikTok’s servers and algorithms would all appear to be firmly under US control. The deal even carries financial rewards for the Trump administration, in the form of a multibillion-dollar payment from investors (effectively a fee for brokering the settlement with the Chinese).
However, look more closely, and the picture is less reassuring. After all, global investors already own roughly 60 percent of ByteDance, TikTok’s parent company, while the company’s founders own another 20 percent and its employees the remaining 20 percent. Thus, the deal merely raises US ownership of the US operation to 80 percent, leaving ByteDance with just under 20 percent — but still the single largest shareholder. More tellingly, the intellectual property behind TikTok’s algorithms remains firmly in ByteDance’s hands. Far from acquiring the recommendation engine outright, Oracle and other US investors are only receiving a licensed copy.
Algorithms are not static assets. Unlike a car or a house, they cannot be transferred once and for all. They are dynamic, data-driven systems that demand constant retraining, fine-tuning, and significant engineering support to remain effective. Oracle might be able to inspect the code, copy it in full and retrain the licensed version on US data, but the new American TikTok would still depend on China for periodic updates. This raises difficult questions: Will Oracle even receive those updates; and, if so, can it meaningfully monitor and audit them?
To be sure, what makes an algorithm powerful is not only its architecture, but also the data on which it is trained. Yet because the US version would rely solely on American user data, Oracle will lack access to the vast global dataset that makes ByteDance’s cutting-edge models so powerful.
China, meanwhile, would hold the legal levers to restrict or impose conditions on any transfer of ByteDance’s technology. Since 2020, China has classified personalized recommendation algorithms as sensitive technology under its export-control regime. That means every export of updates or improvements to TikTok’s algorithm is subject to Chinese government approval.
The Chinese authorities therefore can make TikTok a diplomatic tool. Should tensions rise over Taiwan, tariffs, Ukraine or restrictions on Nvidia chip exports, China could delay or withhold licensing approvals, using TikTok as yet another bargaining chip. In this way, the platform has been transformed into a powerful instrument of Chinese statecraft.
Faced with a licensing arrangement that is governed less by legal terms than by shifting geopolitical winds, US investors in the new TikTok should brace themselves for heightened uncertainty. Rather than shifting TikTok from Chinese to American control, this deal merely replaces one form of dependence with another.
Yes, ByteDance would no longer oversee daily content recommendations; Oracle would, easing the US government’s most immediate security concerns. However, China would retain residual control over TikTok’s algorithms. It has the freedom to set the scope of the license, determine the frequency of updates and decide whether the US version can keep pace with the global one. Far from diminishing China’s influence, the deal risks entrenching it.
With this agreement, the fear of Chinese access to Americans’ data or direct manipulation of algorithms might fade, but it would be replaced by a subtler and more enduring risk: technological dependence on China, which holds a chokehold over TikTok’s powerful recommendation engine. The Trump administration has simply traded one vulnerability for another.
That said, a less competitive US version of TikTok might not be bad for the US. Some might even see it as a blessing in disguise. A less competitive TikTok would be a less addictive TikTok. That would ultimately benefit US teenagers — whether or not they realize it.
Angela Huyue Zhang, professor of law at the University of Southern California, is the author of High Wire: How China Regulates Big Tech and Governs Its Economy and Chinese Antitrust Exceptionalism: How the Rise of China Challenges Global Regulation.
Copyright: Project Syndicate
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