It looks like TikTok is going to remain available in the U.S., with the Trump Administration looking to move ahead with a new deal that would see the creation of a separate entity called “TikTok America”, and would then invite investment from U.S. partners.
As first reported by The Information, President Trump, who’s been working to find a way to save the app, has seemingly approved a deal that his team believes will meet the requirements of the “Protecting Americans from Foreign Adversary Controlled Applications Act.” That bill went into law on January 19th, and it stipulates that TikTok must be sold into U.S. ownership in order to remain in operation in the nation.
And because the bill was approved before Trump was inaugurated, Trump can’t overturn the law as it stands. As such, Trump instead granted a 75-day suspension of enforcement of the law, and that hold will expire later this week.
But the White House is now confident that it’s found a way to keep the app in operation, while aligning with the letter of the new law.
The Information reports that “TikTok America” will be 50% owned by a group of U.S. investors. They will likely include Oracle, Blackrock, and Andreesen Horowitz, among others to be confirmed.
The deal would also license TikTok’s almightly algorithm to the U.S. entity, meeting a key requirement for the Chinese government, in that TikTok owner ByteDance won’t be forced to sell its algorithm.
The only challenge then is that the law states that foreign-owned entities cannot have direction or control over the platform, nor maintain an “operational relationship” in regards to its content recommendation algorithms.
It’s unclear if leasing the algorithm will meet these specifics, but again, the Trump teams seems confident that it will meet the bar.
The proposal will also see ByteDance will retain a 19.9% stake in the U.S. entity. The law says that foreign-owned entities cannot own more than 20% of the app, so 0.1% less is within those parameters.
So, is it a good deal?
Well, it seems like it could technically meet the legal requirements of the Senate-approved law, which would keep TikTok in operation in the U.S. But the fact that ByteDance will maintain operational control of the algorithm, while also holding a significant stake in the app, could be seen as too much of a concession by some who supported the initial bill.
As a reminder, the original bill was enacted due to unspecified national security concerns, relating to both the collection of data on U.S. citizens via the app, and the dissemination of pro-China propaganda. Neither of these elements has been definitively proven, at least not based on what’s been shared publicly by security agencies. But after U.S. senators were briefed on these threats, they voted for the bill with a cumulative 431 to 83 count across the House and the Senate. That means that the vast majority of senators, Republican and Democrat, held grave concerns about the app following these top secret briefings.
As such, the fact that ByteDance would still “own” the algorithm could be a sticking point, and it’ll be interesting to see how the proposal is pressure tested ahead of enactment.
Also, it’ll be interesting to see what other companies look to get in on the act, and buy a stake in the U.S. TikTok entity.
Amazon, Walmart, MrBeast, Reddit founder Alexis Ohanian, and many others have shown an interest in the platform. Could they also look to build their own business interests in the app via a shared ownership structure?
There are still some kinks to work out, but it does seem like TikTok will remain available in the U.S.
